Centre extends auto PLI scheme by a year

The government has issued a gazette notification announcing the extension of the ₹25,983-crore Production Linked Incentive (PLI) scheme for automobile and auto components by one year.

The decision was made after receiving the approval of the Empowered Group of Secretaries (EGoS).

Fortune India first reported about the extension of the auto PLI scheme in August 2023.

The Ministry of Heavy Industries has made partial amendments to the Production Linked Incentive (PLI) scheme for the automobile and auto component industry. These amendments, effective from the date of publication in the official gazette, aim to provide clarity and flexibility to the scheme, says the Centre.

Under the amended scheme, the incentive will be applicable for five consecutive financial years, starting from the financial year 2023-24. The incentive's disbursement will occur in the following financial year 2024-25.

The scheme also specifies that an approved applicant will be eligible for benefits for five consecutive financial years, but not beyond the financial year ending on March 31, 2028.

Furthermore, the amendments state that if an approved company fails to meet the threshold for an increase in determined sales value over the first year's threshold, it will not receive any incentive for that year.

However, it will still be eligible for benefits in the next year if it meets the threshold calculated based on a 10% year-on-year growth over the first year's threshold. This provision aims to ensure a level playing field for all approved companies and safeguard those who prefer to front-load their investments.

The amendment also includes changes to the table indicating the incentive outlay, with the total indicative incentive amounting to ₹25,938 crore. These amendments to the PLI scheme for the automobile and auto component industry and guidelines of the scheme are expected to provide greater clarity and support to the sector, promoting growth and competitiveness.

The government had earlier said it would consider disbursing incentives every quarter after it was suggested by various companies selected for the PLI scheme.

Vehicle testing agencies — Global Automotive Research Centre (GARC) and National Automotive Test Tracks (NATRAX) — will be included to give faster clearances, Union Minister for Heavy Industries Mahendra Nath Pandey had said last year. Currently, the testing to avail of the PLI scheme is being done by the Automotive Research Association of India (ARAI) and the International Centre for Automotive Technology (ICAT).

The government expects the PLI scheme to create 1.48 lakh fresh jobs. The scheme was envisaged to boost domestic manufacturing of advanced automotive technology products – 19 categories of vehicles and 103 AAT components. The focus of the scheme is on battery electric vehicles and hydrogen fuel cell vehicles.

The PLI-Auto scheme promotes only those eligible AAT products for which a minimum 50% domestic value addition is achieved and has been certified by testing agencies.