Components makers Uno Minda, Bosch may soon get DVA certificates under auto PLI

New Delhi: Bosch Ltd and Uno Minda Ltd will soon get their domestic value-addition certificates under the production-linked incentive (PLI) scheme for automotives and automotive components run by the ministry of heavy industries, two persons aware of the matter said.

Automotive components manufacturers Bosch and Uno Minda are set to receive the domestic DVA certificates, marking an addition in localisation under the the ₹25,938-crore PLI scheme.

Bosch is a German engineering company while Uno Minda is a Gurugram-based domestic auto components manufacturer.

In the PLI-Auto scheme, selected applicants need to apply for DVA certification to attest their domestic manufacturing, or localization, efforts. They become eligible for the incentive after they receive the certification. All companies under PLI-Auto have to prove a minimum of 50% domestic value addition in their product and supply chain to be eligible for incentives under the scheme.

Also Read: Auto firms can start claiming PLI benefits, but there's a catch

The Union government approved the PLI-Auto scheme in 2021 with the intent to boost local manufacturing of automotive technology products and enable creation of domestic as well as global supply chains, as per the ministry of heavy industries. The ministry of heavy industries has announced the extension of the tenure of the PLI Scheme for Automobile and Auto Components by one year. Under the amended scheme, the incentive will be applicable for a total of five financial years, starting from the financial year 2023-24.

So far, about eight companies including Tata Motors, Mahindra & Mahindra, and Ola Electric (for two wheelers) have received the DVA certificates for automobiles, and this number is expected to reach 13 in the next few months, the persons cited above told Mint on condition of anonymity.

As many as 14 automobile manufacturers and 73 automotive component manufacturers were selected as beneficiaries under the PLI-Auto scheme in 2022, a government press release said.

Queries emailed to Bosch, Uno Minda and the Union ministry of heavy industries remained unanswered till press time.

"Achieving 50% DVA is very difficult in the automotive sector. Only 7-8 companies have gotten DVA status because we (India) are heavily dependent on imports, so achieving DVA is very difficult," one of the persons said.

The DVA mechanism is aimed at ensuring use of domestic products in line with the phased manufacturing programme (PMP) under the electric vehicle incentive scheme 'FAME'. Under FAME (faster adoption and manufacturing of electric vehicles), manufacturers receive incentives when they produce 18 components domestically. Companies have to produce half their products in India to get the DVA certificate, one of the two officials said.

In January, Mint reported that 25 product approvals are under process for DVA certification by automotive component suppliers, though no approval has been granted so far and that the ministry of heavy industries has stated that it will begin the disbursal of incentives under the scheme in FY25.

Also Read: Govt wants to certify all automotive PLI applicants by July

To obtain the DVA certificate and receive PLIs, component makers have to submit details of their product, an array of suppliers from whom they procure parts to make the component, details about imports used to make the components, a calculation indicating that the company has at least 50% DVA, and a fee.

Additions to the list of DVA-certified component makers under the PLI-Auto scheme indicate the rising investment in the automotive sector by domestic and foreign private companies in India. The scheme has been successful in attracting proposed investment of ₹67,690 crore against the target of ₹42,500 crore over a period of five years, as per data from Invest India, a government-run portal handled by the ministry of commerce and industry.

The automotive industry has brought over $36 billion in foreign direct investment to India, accounting for 5.34% of the total FDI inflows in the country from April 2000 to March 2024, as per Invest India data.