The Union Ministry of Heavy Industries is actively working towards ensuring that all 85 applicants under the production-linked incentive (PLI) scheme for advanced automotive technologies receive approval certification against the scheme’s domestic value-addition (DVA) criteria by July 2024. The PLI scheme, aimed at promoting advanced automotive technologies, requires participants to demonstrate a minimum of 50% domestic value addition in their products and supply chains to qualify for incentives.
Kamran Rizvi, the secretary of the Union Ministry of Heavy Industries, expressed confidence in the proper implementation of the PLI scheme and stated that the ministry is targeting the certification of all 85 applicants by July 2024. This initiative aims to boost the automotive sector by encouraging investments in advanced technologies, fostering innovation, and increasing domestic manufacturing.
The PLI scheme covers both original equipment manufacturers (OEMs) and automotive component suppliers. As part of the certification process, applicants need to prove a minimum of 50% domestic value addition in their products and supply chains. This stringent assessment is conducted by government-affiliated testing agencies, such as the Automotive Research Association of India (ARAI), which are monitored by the Comptroller and Auditor General of India to ensure adherence to the scheme’s rules and requirements.
While eight OEMs have applied for DVA certification for 39 products, approvals have been granted for 22 products by three OEMs, and 11 certifications are still in process. Similarly, 25 product approvals are under process for DVA certification by automotive component suppliers, though no approval has been granted so far.
The ministry’s additional secretary, Hanif Qureshi, indicated that a meeting of component applicants is likely to be called soon to facilitate DVA applications for automotive suppliers that have not yet secured any DVA certifications. This move aims to streamline the certification process and support those automotive companies that are yet to receive DVA certifications.
Suman Mishra, the CEO of Mahindra Last Mile Mobility, emphasized the need for the government to finalize the standard operating procedure (SOP) for claiming incentives. The ministry has outlined its intention to commence the disbursal of incentives under the scheme in the fiscal year 2024-25. The incentives will be awarded based on evidence of actual sales and audits of investments made in advanced automotive technologies.
The PLI scheme plays a crucial role in promoting the adoption of advanced automotive technologies, including electric powertrains. Tata Motors and Mahindra & Mahindra have already received localization certifications from ARAI for a range of products with electric powertrains, showcasing the scheme’s impact on encouraging innovation in the electric vehicle segment.
However, the certification process has presented challenges for many companies, with complexities in the application process and the need for detailed data of local sourcing at various tiers of the supply chain. IFCI, a project management agency, has been appointed to oversee the scheme’s implementation, and a standard operating procedure (SOP) for DVA has been released to guide the beneficiaries.
As part of monitoring and ensuring compliance, the government conducts periodic visits to the manufacturing plants of approved beneficiary companies and undertakes quarterly reviews of the scheme’s progress. The PLI scheme is designed to strengthen the automotive sector, enhance domestic manufacturing capabilities, and position India as a hub for advanced automotive technologies.
