To meet industry demand, the government on Tuesday decided to extend the duration of the Production Linked Incentive (PLI) scheme for cars and auto parts by another year to 2027-28.
After the extension, the five-year plan, which was originally scheduled to be implemented from 2022-23 to 2026-27, will be in effect until 2027-28.
Speaking at the PLI-Automobile Scheme Review, Heavy Industries Minister Mahendra Nath Pandey said that apart from extending the deadline, the government has decided to agree with industry stakeholders to distribute the incentives on a quarterly basis Annual plan, according to the previous plan.
“There have been a number of demands from the industry including extending the duration of the scheme by one year, quarterly incentives to qualified companies and thirdly, adding two more institutions to test vehicles and components – Global Automotive Research Center in Chennai (GARC) and the National Automobile Testing Track (NATRAX) in Madhya Pradesh,” Pandey said.
As of now, testing is being conducted only at the Automotive Research Association of India (ARAI) in Pune and the International Center for Automotive Technology (iCAT) in Manisar (Haryana).
“The addition of two more centers will help government and industry complete the required testing more quickly to take advantage of the PLI scheme,” he said.
Who gets PLI?
Under the Automotive PLI scheme, incentives are available for confirmed sales of Advanced Automotive Technology (AAT) products (vehicles and components) manufactured in India for five consecutive years from 1 April 2022.
Pandey mentioned that the PLI-Auto program only incentivizes those eligible AAT products that have achieved at least 50% Domestic Value Added (DVA) and have been certified by the Mitsubishi Heavy Industries Testing Authority (TA). The standard will reduce imports, promote deep localization of AAT products, and facilitate the creation of domestic and global supply chains.
As many as 95 companies have been admitted to the scheme, which aims to promote local manufacturing of new technology products such as electric vehicles (EV) through subsidies.
The investment reported by the applicant (as of June 30, 2023) is Rs 107.55 crore with a total expenditure of Rs 676.9 crore over the next five years. In order to facilitate the Ease of Doing Business (EODB) in the program, MHI released the standard operating procedure (SOP) for DVA certification on April 27, 2023. Since then, two companies, Tata Motors and Mahindra & Mahindra, have obtained DVA certification, and four other applicants have obtained DVA certification and have applied for DVA certification.
In addition, 23 more applicants are expected to apply for DVA certification by the end of September. The minister added that detailed standard operating procedures are being developed for the verification and processing of incentive claims and stakeholder consultations will be launched soon.