Govt to extend Rs 26,000 crore auto incentive scheme by a year

NEW DELHI: The government on Tuesday promised relaxations in the Rs 26,000-crore production-linked incentive (PLI) scheme for the auto sector, and said that it will extend the tenure of the zero-emission technology programme by one more year on demands made by the industry.
Heavy industries minister Mahendra Nath Pandey also said that the government will consider the demand of companies selected for the scheme to disburse the PLI incentives on a quarterly basis, against the current plan to make annual payments.
“We are confident that the PLI scheme will not only provide incentives to the companies, but will also help in creating new investments, scale, skills, technological advancements, and jobs in the Indian auto sector. We are ready to consider certain demands raised by the companies on the matter,” the minister said after a day-long session with the industry and other stakeholders.
After extension, the five-year scheme – originally in place between 2022-23 and 2026-27 – will be active until 2027-28. At present, incentives are applicable under the scheme for determined sales of Advanced Automotive Technology (AAT) products (vehicles & components) manufactured in India from April 1, 2022.

The minister also said that the government plans to increase the number of agencies testing domestic value addition (DVA) from two at present to four, by adding facilities in Indore and Chennai. “We hope that the scheme will gather pace due to these measures.” The auto PLI scheme carries obligations on companies regarding indigenisation of the production with DVA of 50%.
The scheme had seen the companies commit investments of Rs 67,690 crore against the initial target of Rs 43,500 crore. The government had approved a total of 85 applications that comprised 18 vehicle makers, including Mahindra, Tata Motors, Hyundai, Toyota Kirloskar, Ola Electric, and Ashok Leyland. A total of 67 component manufacturers were also selected.
Heavy industries secretary Kamran Rizvi said the government remains open to understanding the concerns of the industry, even as it remains alert to adherence to norms around domestic value addition.
Companies had also raised concerns with the government regarding certain aspects around running of the scheme, and these included exemptions towards localisation of semiconductors, and sharing of incentives between vehicle manufacturers and those making components.