DHI Notifies PLI Scheme For Auto Sector

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An approved applicant will be eligible for benefits for five consecutive years but not beyond the year ending March 31, 2027

The Rs 25,938 crore production-linked incentive (PLI) scheme for the auto and drone industry has been notified by the Ministry of Heavy Industries.

The scheme for Automobile and Auto components proposes financial incentives to boost domestic manufacturing of Advanced Automotive Technology products and attract investments in the automotive manufacturing value chain.

The scheme consists of two components incentivizing incremental sales of automobile and auto components related to Advanced Automotive Technology.

Total Incentive per entire Group company(ies) is capped at Rs 6,485 crore (25 per cent of total incentives outlay under this scheme). The cap on incentive payable to the approved company or Group of company(ies) as stated above would be incorporated as part of the agreement, as per the notification.

To retain flexibility in the implementation of the scheme, it proposes fungibility of funds within and across the components of the scheme.

Incentives will be applicable starting from 2022-23, which will be disbursed in 2023-24 and so on for a total of five consecutive financial years.

An approved applicant will be eligible for benefits for five consecutive years but not beyond the year ending March 31, 2027.

Financial year 2019-20 will be treated as the base year for calculation of eligible sales value.

It added that in case the approved company fails to meet the cumulative domestic investment condition in any given year, it will not receive any incentive for that year even if the threshold for determining sales value is achieved.

However, it will still be eligible to receive the benefits in the following years if it meets the cumulative domestic investment condition defined for that year.

Criteria For Non-Automotive Companies

It said that a non-automotive company or its group firm can qualify for this scheme provided they present a clear business plan to invest in India and generate revenues from advanced automotive technology vehicles or components manufacturing.

“New Non-Automotive Investor company or its Group company(ies) will be defined as those who have no revenue from the manufacturing of Automobile or auto- components as on 31st March 2021,” it said.

For the approved New Non-Automotive Investor company (who is currently not in automobile or auto component manufacturing business) eligible sales value in the base year will be taken as zero.

It also said the list of advanced automotive technology vehicles like Battery Electric Vehicles (BEV), Hydrogen Fuel Cell Vehicles etc will be prescribed by the ministry from time to time depending upon technological developments.

“The approved applicants will apply for registration of their products as eligible Advanced Automotive Technology vehicles to seek incentive in this scheme.

“Pre-approval of eligible products will be done by the Testing Agency of the ministry as Advanced Automotive Technology Product,” it said, adding a minimum 50 per cent domestic value addition will be required.

The threshold sales value for the first year is Rs 125 crore in respect of all companies — existing automotive and new non-automotive investor companies under this component of the scheme to claim incentives.

“Year on Year growth of minimum 10 per cent in Determined Sales Value of first-year i.e Rs 125 crore has to be achieved by all approved companies…to become eligible to receive incentive,” the notification said.

In case the approved company fails to meet the threshold for increase in sales value for any given year, it will not receive any incentive for that year.

The scheme will be implemented through a nodal agency. Such agency will act as a Project Management Agency (PMA) and be responsible for providing secretarial, managerial and implementation support and carrying out other responsibilities, as assigned by the ministry.

“All applications will be submitted through an online portal maintained by the PMA. In case the portal is not available, applications may be submitted in physical form to the PMA,” the guidelines. “Monthly review will be done at Secretary of the ministry for monitoring of timely disposal of the applications.”

In order to receive the incentives, the approved companies need to upload their annual claims under the scheme, along with audited financial statements / supporting documents, as certified by a chartered accountant and any other document.

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