The Ministry of Heavy Industries has recently announced changes to the Production Linked Incentive (PLI) Scheme for the automobile and auto components industry. This scheme, which was initially announced on September 23, 2021, aims to boost domestic manufacturing and promote advanced automotive technologies.
The key amendment involves a modification to the domestic value addition (DVA) requirement. Under the new guidelines, a minimum of 50% domestic value addition is mandatory for products to be eligible for the scheme. This percentage remains the same as previously outlined. However, the amendment clarifies that the Ministry of Heavy Industries’ testing agency will be responsible for certifying the domestic value addition in eligible products.
Another significant update relates to the disbursement mechanism. The amendment now specifies that pre-approval of advanced automotive technology vehicles and components will be conducted by the Ministry’s testing agencies. This process is designed to ensure that these products meet the necessary standards. Once approved, manufacturers can submit their claims for incentives through the scheme’s dedicated portal.
The methodology for determining domestic value addition will continue to align with the approach followed in the FAME-II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme. This ensures consistency across related government initiatives, aimed at supporting the development of advanced automotive technologies and reducing reliance on imports.
These changes are expected to streamline the PLI scheme and make it more efficient for manufacturers to benefit from government incentives. By reinforcing the requirement for domestic value addition and ensuring a smooth process for claiming incentives, the government is encouraging more investment in local manufacturing and advanced technology development within the automotive sector.
This amendment took effect immediately upon its publication in the official gazette on September 6, 2024. The Ministry remains committed to supporting the growth of the domestic automobile industry, particularly in the areas of advanced technology and innovation.
