ARAI likely to plan division of auto testing agencies allocation under PM E-drive scheme among four agencies
Summary
As part of the PM E-drive scheme, ARAI is likely to manage the distribution of ₹780 crore for upgrading automotive testing agencies. This funding is essential for enabling manufacturers to access subsidies for electric vehicles.
New Delhi: The Automotive Research Association of India (ARAI) is likely to spearhead the distribution of ₹780 crore earmarked for upgrading the nation’s automotive testing infrastructure as part of the government’s ₹10,900-crore electric vehicle (EV) subsidy scheme, two persons aware of the matter said.
Being the oldest and largest among these agencies, ARAI will formulate a plan to allocate the fund among the four testing agencies enlisted under the PM E-drive scheme - ARAI itself, International Centre for Automotive Technology (ICAT), Global Automotive Research Centre (GARC), and National Automotive Test Track (NATRAX).
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"ARAI is likely to make a plan for the division of PM E-drive scheme's allocation, being the oldest and biggest testing agency among those empowered under the scheme," said the first person mentioned above, requesting anonymity.
The plan assumes importance as it would determine the upgradation of all testing agencies, which have the powers to grant authorization to companies to claim subsidies and incentives under various government schemes.
Under discussion
The decision to allow ARAI to formulate a plan is currently under discussion, and has not been fully finalized yet, another government official told Mint on the condition of anonymity.
An email query sent to ARAI did not elicit a response.
Operated by the ministry of heavy industries, the PM E-drive scheme is the government's flagship scheme for subsidizing electric vehicles.
Under this scheme, consumers can purchase electric two-wheelers, three-wheelers, ambulances, buses, and trucks at a subsidized price, and original equipment manufacturers (OEMs) can claim the subsidized amount from the government.
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A crucial part of the scheme also focuses on the upgradation of the four auto testing agencies. Of the ₹780 crore allocated to testing agencies, ₹300 crore will be disbursed in FY25, and the remainder in FY26, as per the scheme.
The allocated funds for testing agencies have not yet been disbursed, said the first person mentioned above.
These agencies are responsible for granting the necessary certificates to OEMs to claim subsidies. One such key certificate is the localization authorization under the government's phased manufacturing programme (PMP).
Boost to domestic manufacturing
The PMP lists the components that automakers are allowed to import, and the timeline for gradually phasing out these imports. All other components used to manufacture vehicles have to be indigenous, in an effort to boost the country's domestic manufacturing capacity.
To be compliant with the PMP, automakers have to send their products to testing agencies for a strip down test, passing which they may be certified to seek subsidies under the PM E-drive scheme.
Experience from working with OEMs in previous subsidy schemes is key in implementing the PM E-drive scheme, experts said.
"While there are four testing agencies under the PM E-drive scheme, ARAI and ICAT's experience in earlier schemes will give them an advantage," said Alok Rai, director - public affairs, Society of Manufacturers of Electric Vehicles (SMEV), an industry body.
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"As large OEMs are currently facing no delays from ARAI to receive their certificates, there is nothing wrong with ARAI taking the lead," said Rai.
Smaller OEMs, however, are still awaiting for more clarity on the strip down test, Rai said, adding that these strip down tests, conducted annually and on random vehicles, had caused confusion in previous subsidy schemes for electric vehicles.
The PM E-drive scheme follows a decade of the FAME scheme. FAME stands for Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles. The first iteration of FAME was announced in 2015, while the second followed suit in 2019. The PM E-drive scheme replaced these schemes and came into force in April 2024.
