Govt Releases SOPs Under PLI Auto Scheme To Testing Agencies, Will Help Firms To Qualify For Financial Incentives

The Ministry of Heavy Industries has released Standard Operating Procedures (SOPs) for the Production Linked Incentive (PLI) Auto scheme to testing agencies.

With this, the applicants under the scheme can now submit their applications for the testing and certification of advance automative technology (AAT) products (both OEMs and components), which will help them qualify for incentives under the PLI Auto scheme, the Ministry of Heavy Industries said in a statement on Thursday (27 April).

The move is aimed at boosting the domestic manufacturing sector and reduce dependence on imports, thereby creating more job opportunities for Indians, according to the ministry.

The Centre had notified the PLI Scheme for Automobile and Auto Component Industry in India (PLI-AUTO Scheme) on 23 September 2021, with a budgetary outlay of 25,938 crore.

The PLI-Auto Scheme proposes financial incentives to boost domestic manufacturing of advanced automotive technology (AAT) products and attract investments in the automotive manufacturing value chain.

The scheme has two parts - Champion OEM, which will make electric or hydrogen-powered vehicles, and Component Champions, which will make high-value and high-tech components.

On 9 November 2021, the Ministry of Heavy Industries had notified the categories of 19 AAT vehicles and 103 AAT components that will be covered under the scheme.

These components are either advanced or latest-technology automotive components, those for which the supply chain is nonexistent in India, or both.

Thus, the scheme envisages to increase India's share in the global advanced technology and automotive supply chains.

According to the scheme guidelines, applicants must achieve a domestic value addition (DVA) of 50 per cent to claim incentives under the scheme.

The auto companies and component makers are required to calculate and present the DVA across their supply chain and present these details to the testing agencies.

The guidelines are part of the government's efforts to promote the Make in India campaign and boost domestic manufacturing of advanced automotive products.

The government had constituted a committee headed by director ARAI Pune and members comprising all testing agencies, including iCAT Manesar, NATRAX, Pune, GARC Chennai, and IFCI (PMA for PLI Auto Scheme), to make an SOP for calculating domestic value addition.

Accordingly, the committee drafted the SOP after deliberating on all the suggestions received from the stakeholders.

Consultations were also held with all 85 applicants for the PLI scheme, that include 18 OEMs and 67 auto component manufacturing companies.

After three rounds of detailed stakeholder consultations, the committee has come up with a draft SOP consisting of a desk appraisal and field visits to the applicants and their suppliers’ manufacturing facilities, a techno-commercial audit of the applicants, and a periodic surveillance assessment, which would provide a greater level of assurance to all the stakeholders.

The SOP has now been released by the testing agencies, and this will allow the applicants under the PLI scheme to apply for approval of AAT products (both OEMs and components), the ministry said.

The ministry added that with a view to promoting ease of doing business, the government has taken care to devise simple procedures with the minimum paperwork needed to file an application under the PLI scheme.