The government has notified the production linked incentive (PLI) scheme for automobile and auto components industry in India for enhancing the country’s manufacturing capabilities of advanced automotive products with a budgetary outlay of ₹25,938 crore.

The scheme consists of two components — incentivising incremental sales of automobile and auto components related to advanced automotive technology — The Ministry of Heavy Industries (MHI) said in a notification.

“Total incentive per entire group company(ies) is capped at ₹6,485crore (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,” the notification said.

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

Incentives to manufacturers

Incentive payable under this scheme to electric vehicle (EV) manufacturers will be independent of/in addition to the incentives given under FAME-II scheme where incentives are provided to customers who buy the vehicles and not to the manufacturers. Under this PLI scheme, incentives are being given to manufacturers not the consumers, the notification further said.

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“Incentives may also be claimed under this scheme for vehicles having 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 in case this incentive is not allowed, they may resort to imports of ACC batteries for cost cutting,” it said.

Project management agency

The scheme will be implemented through a nodal agency which 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 MHI from time to time.

To carry out activities related to the implementation of the scheme, PMA would inter-alia be responsible for appraisal of applications and verification of eligibility for support under the scheme, examination of claims eligible for disbursement of incentives under the scheme, and compilation of data regarding progress and performance of the scheme including cumulative domestic investment and incremental eligible sales of goods for companies.

It will also be responsible for keeping a check on diversions arising out of any change in accounting policy or duplication of benefits on account of same activity under different schemes. To; and to avoid duplication and formation of multiple committees, the administrative mechanism created under FAME-II scheme in MHI will be used to grant approvals under PLI scheme for automobile and auto components.

Cost audit

The scheme will also have a provision for cost audit by external auditor (cost or chartered accountant) appointed by MHI. Expenses will be met within the allocation of the scheme, the notification said.

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The scheme begins in FY23, the incentives for which will be disbursed in the following year (FY24) and so on for a total of five consecutive financial years. The process will be data driven to ensure transparency, automaticity and prompt disbursement of incentives.

“For the effective operation and smooth implementation of the scheme, detailed guidelines shall be notified separately. The guidelines are to be read along with the scheme. In case of any inconsistency between the scheme and the guidelines, the provisions of the scheme shall prevail,” the notification added.

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