The allocation for Production Linked Incentive (PLI) scheme is expected to remain unspent in the current financial year and will be reflected in the Budget savings as certification of products that will be eligible for benefits is taking time, a senior official said Wednesday.
The budget outlay for auto sector PLI is Rs 604 crore. The Ministry of Heavy Industries that is administering the auto sector PLI had earlier considered releasing the incentives on quarterly sales to eligible companies but after inter-ministerial consultation the idea was dropped.
Till date only two companies – Tata and Mahindra and Mahindra – have already received PLI eligibility certificates. Many of the selected companies are struggling with designing products that can meet the eligibility criteria. One big issue coming in the way is the stipulation that for availing the incentives 50% local value addition is a must.
The official said some other applications are pending before the Automotive Research Association of India which is the certifying authority. He said around six more companies are close to getting the eligibility certificate in January.
The companies that are next in queue are Ola, TVS, Minda, Toyota and Hero. The PLI scheme for Automobile and Automotive Component Industry was launched in 2021 with a total outlay of Rs 25938 crore. It offers financial incentives to boost domestic manufacturing of Advanced Automotive Technology products and attract investment in the automotive value chain.
The scheme is subdivided into Champion OEM Incentive Scheme and Component Champion Incentive Scheme. The Champion OEM Incentive scheme is a ‘sales value linked’ scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments.
Under component champion incentive scheme incentives are applicable on pre-approved Advanced Automotive Technology components of all vehicles, CKD/SKD kits, vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors including automobiles meant for military use.
Incentive will be applicable on Determined Sales Value starting from Financial Year 2022-23 for a total of five consecutive financial years till FY 2026-27. The scheme evoked good response from the manufacturers with the government receiving 115 applications for being added as beneficiaries. Out of the total number of applicants 20 automakers and 75 Original Component Manufacturers and parts makers were selected.