The Government has issued Notification regarding Production Linked Incentive (PLI) Scheme for Automobile & Auto components. The PLI Scheme for Automobile & Auto components and its Guidelines have been notified in the Gazette of India on 23.09.2021. Earlier government approved the Production Linked Incentive (PLI) Scheme for Automobile and Auto Component Industry on 15.09.2021.
The PLI Scheme for the auto sector envisages to overcome the cost disabilities of the industry for manufacture of Advanced Automotive Technology products in India. The incentive structure will encourage industry to make fresh investments for indigenous global supply chain of Advanced Automotive Technology products. It is estimated that over a period of five years, the PLI Scheme for Automobile and Auto Components Industry will lead to fresh investments of over Rs. 42,500 crores, incremental production of over Rs. 2.3 lakh crore and will create additional employment opportunities of over 7.5 lakh jobs. Further this will increase India’s share in global automotive trade.
The PLI Scheme for Auto sector is open to existing Automotive companies as well as new Non-Automotive investor companies (who are currently not in automobile or auto component manufacturing business). The scheme has two components viz Champion OEM Incentive Scheme and Component Champion Incentive Scheme.
The scheme for Automobile and auto components will be implemented over a period of five years starting from FY 2022-2023.
Champion OEM Incentive Scheme: The Champion OEM Incentive scheme is a ‘sales value linked’ scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments and any other Advanced Automotive Technology vehicle prescribed by MHI depending upon technical developments.
Table – I
Basic Eligibility Criteria:
Eligibility Criteria |
Auto OEM |
Auto-Component |
Global group* Revenue (from automotive and/or auto component manufacturing) |
Minimum Rs. 10,000 crore. |
Minimum Rs. 500 crore. |
Investment |
Global Investment of Company or its Group*Company(ies) in fixed assets (gross block) of Rs. 3,000 crores. |
Global Investment of Company or its Group*Company(ies) in fixed assets (gross block) of Rs. 150 crore. |
*Group Company(ies) shall mean two or more enterprises which, directly or indirectly, are in a position to:
Exercise 26% or more of voting rights in the other enterprise.
Or
Appoint more than 50% of members of Board of Directors in the other enterprise. (As defined in the FDI Policy Circular of 2020)
Note: I. Above Eligibility criteria to be met based on audited financial statements for year ending March 31, 2021.
ii. An applicant company or its Group company(ies) must satisfy the entire eligibility criteria to be eligible under the scheme.
Eligibility Criteria |
New Non-Automotive investor company or its Group company(ies) (who are currently not in automobile or auto component manufacturing business) |
Global net worth |
Rs 1000crorebased on audited financial statements for year ending March 31, 2021. |
Committed investment in India over five-year period |
As per Minimum New Domestic Investment Conditions mentioned in para – 3.2(c) below. |
|
Note:
Cumulative New Domestic Investment Condition of Performance (Rs Crore)
Cumulative new domestic investment to be achieved |
Champion OEM (Except 2W & 3W) |
Champion OEM 2W & 3W |
Component Champion |
New Non-Automotive investor (OEM)company or its Group company(ies) |
New Non-Automotive investor (Component)company or its Group company(ies) |
Up to or before March 31, 2023 |
300 |
150 |
40 |
300 |
80 |
Up to or before March 31, 2024 |
800 |
400 |
100 |
800 |
200 |
Up to or before March 31, 2025 |
1400 |
700 |
175 |
1400 |
350 |
Up to or before March 31, 2026 |
1750 |
875 |
220 |
1750 |
440 |
Up to or before March 31, 2027 |
2000 |
1000 |
250 |
2000 |
500 |
Note:
(d) Preference will be given to eligible company or its Group company(ies) committing to front load their investment during the scheme period. Proposed investment commitment will be evaluated by calculating the Net Present Value (NPV) of the investment using the bank rate as the discounting factor.
Table –II
Incentive Slabs for Champion OEM and New Non-Automotive (OEM)
Investor Company
Determined Sales Value (in Rs. Crore) |
Incentives (%age of Determined Sales Value) |
<= 2,000 |
13% |
> 2,000 to 3,000 |
14% |
> 3,000 to 4,000 |
15% |
> 4,000 |
16% |
Cumulative Determined Sales Value of Rs. 10,000 Crore over 5 years |
Additional 2% |
Note: - i. Only those Battery Electric Vehicles will be eligible for incentives which meet the performance criteria of FAME-II scheme or as notified from time to time by MHI.
Table –III
Incentive slab for Component Champion and New Non-Automotive (Component)
Investor company
Determined Sales Value (in Rs. Crore) |
Incentives (%age of Determined Sales Value) |
<= 250 |
8%* |
> 250 to 500 |
9%* |
> 500 to 750 |
10%* |
> 750 |
11%* |
Cumulative Determined Sales Value of Rs. 1,250 Crores over 5 years. |
Additional 2% |
Battery Electric vehicles & Hydrogen fuel cell vehicles components |
Additional 5% |
*Multiplied by a factor of 0.9 in the fifth year for eligible sales relating to Internal Combustion Engine (ICE) vehicle components.
Note: - i. On an annual basis, the approved company under the Component Champion Scheme will have to separately report break up of sales value of components specific to Battery-EV and Hydrogen Fuel Cell vehicle produced in India.
The Scheme and the Guidelines for the PLI scheme for Automobile and Auto component have been notified in the Gazette of India on 23rd September 2021. The notifications are also available on the website of Ministry of Heavy Industries.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.