Govt to start giving PLI incentives for auto cos in FY25

  • Of 67 applicants to the auto PLI scheme, only Tata Motors and M&M have received domestic value-add certificates so far
  • Disbursements are delayed due to requirement for extensive paperwork, signed off by statutory auditors, that applicants have to obtain to be eligible for incentives

Alisha Sachdev
First Published19 Dec 2023, 10:26 PM IST
Mahendra Nath Pandey, minister for heavy industries.
Mahendra Nath Pandey, minister for heavy industries.

New Delhi: The government will start crediting incentives under the 26,000 crore production-linked incentive scheme for automobiles and auto components from the next fiscal year, Union minister for heavy industries Mahendra Nath Pandey said in a written reply to Parliament on Tuesday. Mint had previously reported that automakers were skeptical about being able to complete the process to claim incentives under the scheme within this year. The scheme was first notified in 2021.

While the announcement comes along expected lines and provides certainty to the scheme's 67 applicants, the delay in disbursement of incentives could be viewed as a setback for homegrown automakers Tata Motors and Mahindra & Mahindra, who have received DVA (domestic value addition) certifications from the government for electric vehicles in the commercial and passenger vehicle space. Sales of electric passenger vehicles have been flattening over the last few months, propelling discounts by leading OEMs. The government, however, expects sales of one lakh electric passenger vehicles this fiscal.

Out of the 67 automotive component makers and 18 OEMs (original equipment manufacturers) who have been selected as beneficiaries of the scheme, only Tata Motors and M&M have received localization certifications from the government-run testing agency ARAI (Automotive Research Institute of India) for a range of products with electric powertrains. The incentives will be awarded against evidence of actual sales and audits of the investment made in advanced automotive technologies. A large number of companies have been unable to submit the necessary documentation, required to be signed off by statutory auditors, in time to become eligible for certifications because of complexities in the application process.

"We expect more companies to receive DVA certifications soon", Dr Hanif Qureshi, joint secretary, MHI, said.

The minister for heavy industries told Parliament that the government has initiated a structured process for the application of incentives under the scheme. A project management agency, IFCI has been appointed to oversee the scheme's implementation and a Standard Operating Procedure (SOP) for DVA has been released to guide the beneficiaries, Pandey said, adding that as part of monitoring and ensuring compliance, the government conducts periodic visits to the manufacturing plants of the approved beneficiary companies and undertakes quarterly reviews of the scheme's progress.

"The eligibility criteria under the scheme for champion OEMs is a global turnover of Rs. 10,000 crore and investment of Rs. 3000 crore in fixed assets. For component champion companies, it is a global turnover of Rs. 500 crore and investment of Rs. 150 crore in fixed assets. While the scheme is promoting global champions in the automotive industry, it will also lead to overall increased manufacturing activity downstream with establishment of supply chain where Small and Medium Enterprises (SMEs) are likely to participate and benefit", MHI said in its reply.

Meanwhile, the ministry of heavy industries (MHI) is also considering combining the standards required for the FAME-II and production-linked incentive scheme for advanced automotive technologies as it weighs the contours of the next phase of its plan to push manufacturing of hybrid and electric vehicles, Mint had reported in August.

The move is seen as a way to streamline processes for auto and auto parts makers who currently have to obtain separate certifications from government-affiliated testing agencies in order to qualify for incentives under FAME-II and the PLI for auto, Kamran Rizvi, secretary, MHI had said.

The heavy industries ministry has also decided to extend the timeline for the validity of the scheme to allow automakers one more year of sales to claim incentives. The government may also pay out the incentives on a quarterly basis as it is keen to utilize the nearly 26,000 crore budgetary allocation for the scheme, minister for heavy industries Mahendra Nath Pandey had said at a review of the auto PLI scheme in August.

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First Published:19 Dec 2023, 10:26 PM IST
HomeNewsIndiaGovt to start giving PLI incentives for auto cos in FY25

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