Innovation Gaps, Import Dependence Pose Hurdles to India’s Automotive PLI Ambitions – Outlook Business

The scheme aimed to promote greater localisation in the auto supply chain while accelerating the shift to clean mobility by providing 8–18% incentives on incremental sales of EVs and high-tech parts. 
 
The plan was ambitious with 20 applicants approved under the Champion Original Equipment Manufacturer Incentive Scheme of the PLI programme and 64 component makers in its initial cohort of approved applicants. It also aligned with India’s goal to increase the share of manufacturing in its GDP to 25% by 2025 to reduce import reliance a target that remains elusive. 

“We import auto parts as much as we export. Indian companies do not innovate as much as their Chinese and South Korean counterparts do. Hence the uptake of the PLI scheme has been slow,” says Devasheesh Mathur, assistant professor of strategy and general management at IMI, a premier business school. He stresses that the scheme targets cutting-edge technologies like EVs, hydrogen fuel cells and autonomous systems, which require significant R&D and capital investment and only a few players in the market can manage. 
 
According to a 2024 report on R&D of auto companies by the financial services firm IIFL Securities, global firms outperformed Indian firms for R&D intensity and for the proportion of PhD employees by 3.1 and 3.4 times respectively. 

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