Govt extends PLI scheme for automotive sector by 1 year until FY28: Heavy Industries Minister Dr Mahendra Nath Pandey

Union Heavy Industries Minister Dr Mahendra Nath Pandey announced on Tuesday, August 30th, that the Union Government has decided to extend the Rs 25,938-crore production-linked incentive scheme for the automotive sector by one year. The extension would mean that the five-year scheme, which was originally scheduled between 2022-23 and 2026-27, will now be active until 2027-28. Presently, the incentives are applicable under the scheme for determined sales of Advanced Automotive Technology (AAT) products (vehicles and components) manufactured in India from April 1st, 2022 onwards, for a period of five consecutive years.

The Heavy Industries Minister announced that the scheme is being extended by one year,  after reviewing the performance of the PLI scheme for the automotive sector with stakeholders. Talking to reporters, he shared that the Ministry has also accepted other suggestions made by auto industry stakeholders pertaining to the scheme including quarterly disbursement of subsidies and increasing the number of agencies testing domestic value addition from two at present to four.

"We hope that the schemes will gather pace due to these measures," the minister said.

Delivering the keynote address at the event, Dr Pandey called for industry’s feedback and collaborative engagement to shape the policies, procedures and effectiveness of the PLI scheme. He said that the government is committed to fostering a conducive business environment and accelerating growth in the Indian automotive sector.

The Minister mentioned that the PLI-Auto scheme incentivizes only those eligible AAT products for which minimum 50 per cent Domestic Value Addition (DVA) is achieved and has been certified by Testing Agencies (TAs) of MHI. This criterion shall reduce imports, facilitate deep localization for AAT products and enable creation of domestic as well as global supply chain.

The minister mentioned that the PLI-Auto scheme incentivizes only those eligible AAT products for which a minimum of 50 per cent Domestic Value Addition (DVA) is achieved and has been certified by Testing Agencies (TAs) of MHI. This criterion shall reduce imports, facilitate deep localization for AAT products and enable creation of domestic as well as global supply chains. As many as 95 companies have been admitted under the scheme that looks to promote local manufacturing of new technology products such as electric vehicles (EV) through subsidies.

The investment, as reported by the applicants (till 30th June 2023), is Rs 10,755 crore. To facilitate ease of doing business (EODB) in the scheme, MHI has published Standard Operating Procedure (SOP) for DVA certification on April 27th, 2023. Thereafter, two applicants namely Tata Motors and Mahindra & Mahindra have received DVA certification, and four more applicants have applied for DVA certification. Further, another 23 applicants are expected to apply for DVA certification by the end of September 2023.

The scheme has two parts: Champion OEM, which will make electric or hydrogen-powered vehicles, and Component Champions, which will make high-value and high-tech components.

Speaking on the occasion, Minister of State for Heavy Industries, Krishan Pal Gurjar said that the auto industry contributes 7 per cent to country’s GDP and PLI scheme will further enhance the competitiveness of the sector and will create more employment opportunities.
 

(With Agency Inputs)