The scheme consists of two components – to encourage incremental sales of automobiles and auto components related to advanced automotive technology
The Ministry of Heavy Industries on September 23 notified ₹25,938 crore Production-Linked Incentive (PLI) scheme for the auto sector, aimed at promoting domestic manufacturing of advanced automotive technology products and attracting investments in the manufacturing value chain.
Its key objectives include overcoming cost inefficiencies, creating economies of scale and building a strong supply chain in the areas of advanced automotive technology products.
The scheme comprises two components – to encourage incremental sales of automobiles and auto components related to advanced automotive technology.
“Total Incentive Per Entire Group Company”[ies] ₹6,485 crore (25% of the total incentive outlay under the scheme). Cap on incentive payable to approved company or group of companies[ies] as stated above, shall be incorporated as part of the agreement,” the notification said.
In order to maintain flexibility in the implementation of the scheme, it proposes to have modularity of funds within and within the components of the scheme.
It said a non-automotive company or its group firm may qualify for the scheme, provided they present a clear business plan to invest in India and generate revenue from manufacturing advanced automotive technology vehicles or components.
“New non-automotive investor company or its group company[ies] They will be defined as those who do not have any revenue from the manufacture of automobiles or auto-parts as on March 31, 2021,” it said.
It said that if the approved company fails to meet the condition of cumulative domestic investment in a given year, it will not get any incentive for that year, even if the prescribed selling price limit is achieved.
However, it will still be eligible to receive benefits in subsequent years if it meets the defined cumulative domestic investment condition for that year.
The incentives will be applicable from 2022-23, to be disbursed in 2023-24 and so on for a total of five consecutive financial years.
An approved applicant will be eligible for benefits for five consecutive years, but not for the year ending March 31, 2027. The financial year 2019-20 will be considered as the base year for computing the eligible selling price. It also said that the list of advanced automotive technology vehicles such as Battery Electric Vehicles (BEVs), Hydrogen Fuel Cell Vehicles etc. will be determined by the Ministry from time to time based on technological developments.
“Approved applicants shall apply for registration of their products as eligible Advanced Automotive Technology Vehicles to receive incentives under this scheme.”
“The pre-approval of the eligible products shall be done by the testing agency of the Ministry as Advanced Automotive Technology Products,” it said, adding that a minimum of 50% domestic value addition would be required.
Further, it said the threshold selling price for the first year is Rs 125 crore in respect of all companies – existing automotive and new non-automotive investor companies to claim incentives under the scheme.
The notification said, “Year on year there has been a minimum 10% increase in the fixed selling price of the first year i.e. Rs 125 crore to be achieved by all the approved companies… to become eligible for availing the incentive. “
If the approved company fails to meet the limit of increase in selling price for a given year, it will not get any incentive for that year.
The scheme will be implemented through a nodal agency. Such agency will function as a Project Management Agency (PMA) and will be responsible for providing secretarial, managerial and implementation support and for carrying out other responsibilities assigned by the Ministry.
Detailed guidelines were also notified separately by the Ministry for effective operation and smooth implementation of the scheme.
“All applications shall be submitted through an online portal maintained by the PMA. If the portal is not available, the applications may be submitted in physical form to the PMA.” “Monthly review will be done on the Secretary of the Ministry to monitor the timely disposal of applications.” To avail the incentive, approved companies need to upload their annual claims under the scheme along with audited financial statements/supporting documents, as certified by a Chartered Accountant and any other document.
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