Centre extends PLI scheme for automotive sector by 1 yr until FY28

"The scheme is being extended by one year," the Heavy Industries Minister said, after reviewing the performance of the scheme with stakeholders here

The government has decided to extend the Rs 25,938-crore production-linked incentive scheme for the automotive sector by one year, Union Heavy Industries Minister Mahendra Nath Pandey said on Tuesday.

Post extension, the five-year scheme, originally in place from 2022-23 to 2026-27, will be active until 2027-28.

At present, incentives are applicable under the scheme for determined sales of Advanced Automotive Technology (AAT) products (vehicles and components) manufactured in India from 1 April 2022 onwards for a period of five consecutive years.

"The scheme is being extended by one year," the Heavy Industries Minister told PTI, after reviewing the performance of the scheme with stakeholders here.

Speaking with reporters on the sidelines earlier, 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," Pandey said.

Delivering the keynote address at the review meeting, 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 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 published Standard Operating Procedure (SOP) for DVA certification on 27th April 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. A detailed SOP is being framed for verification and processing incentive claims and stakeholder consultations for the same shall be initiated shortly.

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.