The government may provide support to companies receiving Chinese investments. According to officials, the government is reviewing applications from automotive and auto component companies with Chinese investments for benefits under the Product-Linked Incentive (PLI) program.
This could benefit several enterprises, including the JSW MG Motor India and Tata AutoComp Systems partnerships. According to a report by The Economic Times, a senior official stated that existing PLI applications approved for Foreign Direct Investment (FDI) will be considered. However, new applications under the PLI scheme will not be accepted.
JSW MG Motor India, which sells MG brand passenger cars in India, is a joint venture between JSW Group and China's SAIC Motor. Tata AutoComp Systems has two ventures with Chinese companies. Tako Prestolite, established in partnership with Beijing Prestolite Electric, designs and manufactures electric and traction motors for electric vehicles. Tako Air International, a partnership with Shanghai Air International Company, produces automotive air conditioning systems.
This decision comes amid improving relations between India and China following tensions caused by clashes in the Galwan Valley in June 2020. At the beginning of this month, Chinese President Xi Jinping visited India for the BRICS summit and held a bilateral meeting with Prime Minister Narendra Modi.
Both countries have strengthened exchanges at ministerial and official levels and agreed to resume direct flights. India has also issued new guidelines to expedite the approval of proposals for foreign direct investments related to Chinese investments.
Due to delays in approving Chinese direct investment proposals, the process for some PLI applications was slowing down. The official noted that some applications, including an electronic components venture with Chinese partner Dixon Technologies, have already received approval for PLI benefits.
The automotive PLI program was approved in September 2021 with a budgetary allocation of ₹25,938 crore. Incentives are tied to increased production, investment, and localization.