PLI scheme guideline for automobile sector notified! Scheme to attract investments of over Rs 42,500 cr, create additional 7.5 lakh jobs in 5 years

The PLI scheme for automobile and auto components and its guidelines have been notified in the Gazette of India.

The PLI Scheme for the auto sector is open to existing automotive companies as well as new non-automotive investor companies, which are currently not in the automobile or auto component manufacturing business. Source: Reuters

The government has issued notification regarding the Production Linked Incentive (PLI) scheme for automobile and auto components. The PLI scheme for automobile and auto components and its guidelines have been notified in the Gazette of India. Earlier government approved the Production Linked Incentive (PLI) scheme for the automobile and auto component Industry on 15th September 2021.

The PLI scheme for the auto sector envisages overcoming the cost disabilities of the industry for the manufacture of Advanced Automotive Technology products in India. The incentive structure will encourage the industry to make fresh investments for the indigenous global supply chain of Advanced Automotive Technology products.

It is estimated that over a period of five years, the PLI scheme for the 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 the global automotive trade.

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The scheme for Automobile and auto components will be implemented over a period of five years starting from FY 2022-2023.

*An approved applicant shall be eligible for benefits for 5 consecutive Financial Years.

* Financial Year 2019-20 shall be treated as the Base Year for calculation of Eligible sales.

* An existing automotive company or its Group company(ies) will need to meet the Basic Eligibility criteria to receive incentives. New Non-Automotive Investor company or its Group company(ies), which are currently not in automobile or auto component manufacturing business are required to meet the Global Net worth criteria of Rs 1000 crore.

The Basic Eligibility criteria are based on audited financial statements for the year ending March 31, 2021. Besides the above eligibility criteria, Minimum New Cumulative Domestic Investment after April 01, 2021 has to be achieved by both the existing automotive companies as well as the new non-automotive investor company or its group company(ies).

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The Champion OEMs (except 2W and 3W) and new Non-Automotive Investor (OEM) company or its Group company(ies) have to invest Rs 2,000 crore over a period of 5 years. Similarly, the Champion OEM (2W and 3W), Component Champion and new Non-Automotive Investor (Component) company or its Group company(ies) have to invest Rs 1,000 crore, Rs 250 crore and Rs 500 crore, respectively, as detailed along with the Basic Eligibility Criteria.

*In case the 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 under the scheme in the following years if it meets the cumulative domestic investment condition defined for that year.

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