Union Govt. launches 25,938-crore PLI scheme for car, auto component

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admin November 9, 2021
Updated 2021/11/09 at 11:03 AM

The Union Govt. has announced the production linked incentive (PLI) programme for the car and auto component industries in India, with a budgeted expenditure of Rs. 25,938 crore, to improve the country’s manufacturing capacity of sophisticated automotive goods.

According to a notice from the Ministry of Heavy Industries (MHI), the plan consists of two components that encourage additional sales of automobiles and auto components linked to innovative automotive technologies.

“The overall reward per group businesses is limited at Rs. 6,485 crore (25 percent of total incentives outlay under this scheme). The agreement would include a limit on incentive payments to the authorised business or group of companies as indicated above, “according to the notice.

The plan offers fungibility of money inside and between the components of the system to maintain flexibility in its execution, it added.

The incentives offered to electric vehicle (EV) producers under this plan will be independent of/in addition to the incentives provided under the FAME-II programme, which are paid to consumers who purchase the cars rather than to the manufacturers. Incentives are provided to producers rather than customers under the PLI programme, according to the notice.

“Incentives may also be claimed under this scheme for vehicles with advanced chemistry cell (ACC) batteries for which incentives have been claimed under the PLI scheme because battery electric vehicle (BEV) manufacturers have the freedom to source ACC batteries from anywhere, and if this incentive is not allowed, they may resort to ACC battery imports for cost cutting,” it said.

The plan will be executed via a nodal agency that will serve as a project management agency (PMA), providing secretarial, managerial, and implementation assistance, as well as other duties as allocated by MHI from time to time.

PMA would be responsible for a variety of tasks related to the scheme’s implementation, including the evaluation of applications and verification of eligibility for support under the scheme, the examination of claims eligible for disbursement of incentives under the scheme, and the compilation of data on the scheme’s progress and performance, including cumulative domestic investment and increments.

It will also be in charge of preventing diversions caused by changes in accounting policy or duplication of rewards due to the same activity under various schemes. To minimise redundancy and the creation of numerous committees, the administrative system developed by MHI under the FAME-II plan would be utilised to issue approvals under the PLI programme for automobiles and auto components.

MHI will also engage an external auditor (cost or chartered accountant) to conduct a cost audit of the programme. Expenses would be covered within the scheme’s allotment, according to the notice.

The programme will commence in FY23, with incentives being distributed the next year (FY24), and so on for a total of five financial years. To guarantee transparency, automation, and timely distribution of rewards, the process will be data-driven.

“Detailed guidelines will be issued separately for the scheme’s efficient functioning and seamless implementation. The guidelines should be studied in conjunction with the scheme. In the event of a conflict between the scheme and the guidelines, the scheme’s provisions will take precedence,” the notice said.

 

Source: Business Line

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