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Towards Aatmanirbhar Bharat: Mega Boost for Auto, Drone, Telecom Sector | Key Points

By: Business Desk


Last Updated: September 15, 2021, 17:07 IST

New Delhi

Union Minister Anurag Thakur and Ashwini Vaishnaw after the cabinet meeting. (Image: PIB)

Union Minister Anurag Thakur and Ashwini Vaishnaw after the cabinet meeting. (Image: PIB)

The Union Cabinet announced a rescue package for the telecom sector and a Rs 26,058 cr PLI scheme for auto, auto-components and drone industries.

The Union Cabinet on Wednesday made two big announcements - the approval of production-linked incentive scheme for auto, auto-component and drone industry, and moratorium on payment of spectrum dues by telcos - to provide a much-needed boost to manufacturing and industry and move towards Prime Minister Narendra Modi‘s vision of an ‘Aatmanirbhar Bharat’.

Union Ministers Ashwini Vaishnaw and Anurag Thakur in a press conference announced the measures.

ALSO READ | Telecom Sector Gets Mega Boost: 100% FDI, 4-year Moratorium for AGR Dues, Shared Spectrum


They announced a rescue package for the troubled telecom sector on Wednesday, which includes relaxation for telecom businesses on payment of long-overdue dues, as well as a four-year freeze on spectrum instalments due in April 2022. The package is intended to provide relief to corporations such as Vodafone Idea, which owe the government a large sum in statutory dues.

The Cabinet-approved relief package includes a provision that allows telecom companies to convert interest on their spectrum dues, which amount to a four-year moratorium, into government stock. The plan could herald an end to telecom companies’ long-standing financial difficulties, as well as their inability to pay thousands of crores of rupees in spectrum fees to the government.

Main Points:

• AGR definition has been rationalised to exclude non-telecom revenues prospectively

• Cabinet approves moratorium of 4 years on telecom dues

• 100% FDI in telecom to be allowed under automatic route

• Spectrum user charges rationalised. There will be now an annual compounding of rates. Spectrum can now be surrendered, spectrum can also be shared Spectrum auction calendar to be created.

• Tower set-up process now simplified on the basis of self-approval

• KYC to shift to postpaid from prepaid done away with

• All portals to be integrated into DoT portal in ease of doing business move

• The annual compounding of Interest and penalty has been abolished.

• 30-year spectrum auction fees instead of 20 years.

• All KYC will be digitised.

• An Auction calendar will be put in place.

• A 1953 Customs notification has been amended, which makes it easy for the import of equipment.

• 4G, 5G Core network technology will be designed in India and manufactured in India.

• Moratorium will start from 1 October.

Auto Sector

A Rs 26,058 crore production linked incentive (PLI) scheme for auto, auto-components and drone industries to enhance India’s manufacturing capabilities was announced by Thakur.

The PLI scheme will incentivize the emergence of advanced automotive technologies’ global supply chain in India. Incentives worth Rs 26,058 crore will be provided to industry over five years, the minister told reporters after the Cabinet meeting. It is estimated that over a period of five years, the PLI scheme for the automobile and auto components industry will lead to fresh investment of over Rs 42,500 crore, incremental production of over Rs 2.3 lakh crore and will create additional employment opportunities of over 7.5 lakh jobs, Thakur said.

ALSO READ | Cabinet Approves Moratorium for Telecom Companies to Pay AGR Dues; Relief to Vodafone

Main points:

• PLI for auto sector cleared, total outlay at $26,538 cr. Rs120 cr to be allocated for drone PLI.

• Champion auto cos will have to make Rs 2,000 cr of new investments over 5 years, 2-W & 3-W have to make investments of Rs 1,000 cr over five years

• Component makers will have to make investments of Rs 500 cr

• Drone industry will receive exceptional treatment. Drone manufacturing PLI will ensure 20% incentive over 5 years

• Tier-1 companies to qualify for auto PLI scheme; New non-automotive investors with net worth of Rs 1,000 cr can qualify.

• Additional 2% incentive for over 10,000 cr revenue in 5 years;

• Incentives under the auto PLI scheme range from 8-13%

• 5% addl incentive for electric and hydrogen fuel cell vehicles

The PLI scheme for automobile and drone industries is part of the overall announcement of PLI schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of Rs 1.97 lakh crore.

The scheme for the auto sector envisages overcoming the cost disabilities to the industry for the manufacture of advanced automotive technology products in India. The incentive structure will encourage industry to make fresh investments for the indigenous global supply chain of Advanced Automotive Technology products, Thakur said.

The scheme for the auto sector is open to existing automotive companies as well as new investors who are currently not in automobile or auto component manufacturing business.

The scheme has two components - Champion OEM Incentive Scheme and Component Champion Incentive Scheme. The Champion OEM Incentive scheme is a sales value linked’ scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments, the minister said.

The Component Champion Incentive scheme is a sales value linked’ scheme, applicable on Advanced Automotive Technology components of vehicles, Completely Knocked Down (CKD)/ Semi Knocked Down (SKD) kits, vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors.

This PLI scheme for automotive sector along with the already launched PLI scheme for Advanced Chemistry Cell (Rs 18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles (Rs 10,000 crore) will enable India to leapfrog from traditional fossil fuel-based automobile transportation system to environmentally cleaner, sustainable, advanced and more efficient Electric Vehicles (EV) based system.

Further the PLI scheme for the drones and drone components industry addresses the strategic, tactical and operational uses of this revolutionary technology.

A product-specific PLI scheme for drones with clear revenue targets and a focus on domestic value addition is key to building capacity and making these key drivers of India’s growth strategy. The scheme will over a period of three years, lead to investments worth Rs 5,000 crore, an increase in eligible sales of Rs 1500 crore and create additional employment of about 10,000 jobs.

With PTI inputs.

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first published:September 15, 2021, 16:29 IST
last updated:September 15, 2021, 17:07 IST
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