New Delhi: The Union Government has chosen to extend the production-linked incentive (PLI) scheme for the automotive sector, with a budget of Rs 25,938 crore. Union Heavy Industries Minister, Mahendra Nath Pandey, announced this decision on Tuesday. The extension will push the originally planned five-year scheme, initially intended from 2022-23 to 2026-27, to remain active until 2027-28.
Under the present provisions, incentives are applicable for specified sales of Advanced Automotive Technology (AAT) products, including vehicles and components manufactured in India starting from April 1, 2022. This incentive will be applicable for a continuous five-year period.
Minister Pandey informed PTI that the scheme's duration is being prolonged by one year. This decision follows a review of the scheme's performance with stakeholders.
During discussions with reporters, he also revealed that the Ministry has accepted various suggestions from the automotive industry stakeholders regarding the scheme. These include the quarterly distribution of subsidies and the expansion of the number of agencies responsible for assessing domestic value addition from the current two to four.
Pandey expressed optimism that these measures will invigorate the scheme's progress.
In his keynote address at the review meeting, Pandey emphasized the importance of industry feedback and collaboration in shaping the policies, procedures, and effectiveness of the PLI scheme. He reiterated the government's commitment to cultivating a business-friendly environment and accelerating growth in the Indian automotive sector.
The Minister highlighted that the PLI-AUTO scheme provides incentives exclusively to eligible AAT products that achieve a minimum of 50 percent Domestic Value Addition (DVA), as certified by the Testing Agencies (TAs) of MHI. This requirement aims to reduce imports, promote extensive localization for AAT products, and facilitate the development of domestic and global supply chains.
Under the scheme, a total of 95 companies have been admitted, all of which aim to encourage local manufacturing of advanced technology products, particularly electric vehicles (EVs), through subsidies.
As of June 30, 2023, the reported investment by applicants amounts to Rs 10,755 crore. To streamline the business process within the scheme, MHI issued a Standard Operating Procedure (SOP) for DVA certification on April 27, 2023. Subsequently, Tata Motors and Mahindra & Mahindra have been certified for DVA, and four more applicants have applied for such certification.
Moreover, 23 more applicants are anticipated to seek DVA certification by the end of September 2023. A comprehensive SOP is being developed for the verification and processing of incentive claims. Stakeholder consultations for this SOP are set to commence shortly.
The PLI scheme consists of two main components: Champion OEM, catering to electric or hydrogen-powered vehicles, and Component Champions, focused on producing high-value and high-tech components.
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