Centre weighing one-year extension for auto PLI

The Centre is considering a one-year-extension for the Rs 25,938-crore production-linked incentives scheme for the automotive sector after none of the participating companies qualified for subsidies in the first year of the plan, said people in the know.

The five-year plan, which became operational from April 2022, may now be extended until March 2028 from the original deadline of March 2027, sources said.

As many as 95 companies have been admitted to the scheme that looks to promote local manufacturing of new technology products such as electric vehicles (EV) through subsidies. However, none of these companies submitted any claims for the first year of the scheme ending March 2023 and, hence, there was no disbursement from the government.

Subsequently, several participant companies requested the government to consider an extension of the scheme by a year, sources said. Now, the government is considering such an extension, they added.
“As an industry, we request that the scheme should be extended by a year. The government took a year to release some details which is understandable given that this is a new scheme,” said Sudhir Mehta, chairman and managing director of Pinnacle Industries, which is one of the applicant companies under the scheme.

“We are not asking for an increase in outlay for the scheme. But the extension will enable the policy to achieve the desired results,” he said.

The Ministry of Heavy Industries (MHI), which is overseeing the PLI scheme for the automotive sector, did not respond to ET’s request for a comment.

Industry executives that ET spoke with said that manufacturers made no claims for FY23 under the scheme because no company received eligibility certificate in time. They blamed this delay on uncertainty around the procedure to calculate their domestic value addition (DVA). Achieving at least 50% DVA is a key criterion to receive the eligibility certificate.

Even now, only Mahindra Last Mile Mobility and Tata Motors have received eligibility certificates for the scheme, and that too for just one model each. Both companies have several other models for which they are yet to receive the eligibility certificate.

“The delay in providing certainty around the manner of DVA computation has led to delayed investments by the successful applicants of the PLI scheme in the automotive industry,” said Saurabh Agarwal, Partner & Auto Tax Leader, EY.

“Many companies have been unable to get product certification in place from testing agencies, and some have delayed investments altogether due to uncertainty around the incentives program,” he said.

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