Union Minister Mahendra Nath Pandey announced that the government will initiate disbursing incentives through the ₹26,000 crore production-linked incentive scheme for automobiles and auto components in the upcoming fiscal year, as stated in a written response to Parliament.
Among the 67 automotive component makers and 18 OEMs chosen as beneficiaries of the scheme, Tata Motors and M&M are the sole recipients of localization certifications from the government-run testing agency ARAI (Automotive Research Institute of India) for various products equipped with electric powertrains. Incentives will be granted based on validated sales data and audits verifying investments in automotive technologies. Many companies have faced challenges submitting the essential paperwork, requiring approval from statutory auditors, within the stipulated timeframe due to intricacies in the application procedure, rendering them ineligible for certifications.
The initiation of granting incentives under the ₹26,000 crore production-linked incentive scheme for automobiles and auto components is slated to commence in the upcoming fiscal year, as stated by Union Minister for Heavy Industries, Mahendra Nath Pandey, in response to Parliament. Notably, only Tata Motors and Mahindra & Mahindra have secured domestic value-add certifications for their electric vehicle products among the 67 scheme applicants. Challenges in documentation submission, necessitating approval from statutory auditors, have hindered many companies from qualifying for certifications, leading to delays in disbursements.
The government’s commencement of disbursing incentives for automobile companies under the ₹26,000 crore production-linked incentive (PLI) scheme is scheduled for the next fiscal year, as confirmed by Union Minister Mahendra Nath Pandey in Parliament. Despite delays in incentive distribution, homegrown automakers Tata Motors and Mahindra & Mahindra have obtained Domestic Value Addition (DVA) certifications for electric vehicles in both commercial and passenger vehicle sectors, amid a recent plateau in electric passenger vehicle sales, prompting leading OEMs to offer discounts. Although the government anticipates sales of one lakh electric passenger vehicles in this fiscal year.
Among the 67 applicants to the scheme, only Tata Motors and M&M have secured localization certifications from ARAI for products featuring electric powertrains. The incentives will be contingent upon verified sales and audits affirming investments in advanced automotive technologies. However, complexities in the application process have hindered several companies from submitting requisite documentation, approved by statutory auditors, in a timely manner for certifications.
Dr. Hanif Qureshi, Joint Secretary at MHI, expressed expectations for more companies to receive DVA certifications soon.
Pandey informed Parliament about the structured approach adopted for incentive applications, with IFCI appointed as the project management agency overseeing scheme implementation. He highlighted the release of a Standard Operating Procedure (SOP) for DVA to guide beneficiaries, emphasizing government monitoring through regular visits to approved beneficiary manufacturing plants and quarterly reviews to ensure scheme progress.
According to MHI’s statement, the eligibility criteria for champion OEMs entail a global turnover of Rs. 10,000 crore and an investment of Rs. 3,000 crore in fixed assets, while for component champion companies, it requires a global turnover of Rs. 500 crore and an investment of Rs. 150 crore in fixed assets. The scheme aims not only to promote global champions in the automotive industry but also stimulate increased manufacturing activities downstream, potentially involving Small and Medium Enterprises (SMEs) in the supply chain and benefiting them.
In a move by the Ministry of Heavy Industries, an extension of the scheme’s timeline has been decided upon, granting automakers an additional year for sales eligibility to claim incentives. Minister for Heavy Industries, Mahendra Nath Pandey, announced during an August review of the auto PLI scheme that the government is considering quarterly disbursements of incentives. This step aims to efficiently utilize the allocated budget of nearly ₹26,000 crore earmarked for the scheme.