PLI Scheme For Auto Industry: Deadline Extended Until 2027, Incentives To Be Disbursed Quarterly

The government has responded to industry demand by extending the deadline of the production linked incentive (PLI) scheme for the automobile and auto component sectors.

This extension means that the scheme, originally set to run from 2022-23 to 2026-27, will now be active until 2027-28.

With the extension of the PLI scheme, businesses in the automobile and auto component sectors can continue to benefit from the incentives for an additional year, ensuring stability and support for their operations until 2027-28.

During the 'Review of PLI-Auto Scheme', Minister of Heavy Industries Mahendra Nath Pandey announced that the government has decided to extend the deadline for the scheme.

Additionally, they have agreed with industry stakeholders to disburse incentives on a quarterly basis instead of annually, as previously planned.

Pandey stated that the industry has made several requests, including a one-year extension of the scheme's deadline, quarterly disbursal of incentives to qualified companies, and the inclusion of two more agencies for testing vehicles and components — the Global Automotive Research Centre (GARC) in Chennai and the National Automotive Test Tracks (NATRAX) in Madhya Pradesh.

Currently, tests are only conducted at the Automotive Research Association of India (ARAI) in Pune and the International Centre for Automotive Technology (iCAT) in Manesar, Haryana.

According to Pandey, the addition of two more testing centres would benefit both the government and the industry by allowing tests to be conducted at a faster pace. This would enable the PLI scheme to be utilised more efficiently.

The Automotive PLI scheme offers incentives for the sale of Advanced Automotive Technology (AAT) products, including vehicles and components, manufactured in India from 1 April 2022, for a consecutive period of five years.

The PLI-Auto scheme provides incentives for eligible AAT products that have achieved a minimum of 50 per cent Domestic Value Addition (DVA) and have been certified by Testing Agencies (TAs) of MHI.

This requirement aims to reduce imports, promote deep localisation for AAT products, and facilitate the development of domestic and global supply chains.

The scheme has admitted a total of 95 companies with the goal of encouraging local manufacturing of new technology products, such as electric vehicles (EVs), through subsidies.

As of 30 June 2023, the applicants have invested Rs 10,755 crore out of the total outlay of Rs 67,690 crore for the next five years.

To promote ease of doing business in the scheme, the Ministry of Heavy Industries (MHI) released a Standard Operating Procedure (SOP) for DVA certification on 27 April 2023.

Tata Motors and Mahindra & Mahindra have already received DVA certification, and four more applicants have applied for it.

By the end of September, it is expected that an additional 23 applicants will apply for DVA certification.

A detailed SOP is currently being developed for the verification and processing of incentive claims. Stakeholder consultations for this SOP will be initiated soon, according to the minister.