PLI Scheme for Automobile & Auto components

September 24, 2021 News Desk Business Comments Off on PLI Scheme for Automobile & Auto components

Sep 24: The Government has issued Notification regardingProduction Linked Incentive (PLI) Scheme for Automobile & Auto components. The PLI Scheme for Automobile & Auto components and its Guidelines have been notified in the Gazette of India on 23.09.2021. Earlier government approved the Production Linked Incentive (PLI) Scheme for Automobile and Auto Component Industry on 15.09.2021.

The PLI Scheme for the auto sector envisages to overcome the cost disabilities of the industry for manufacture of Advanced Automotive Technology products in India. The incentive structure will encourage industry to make fresh investments for indigenous global supply chain of Advanced Automotive Technology products. It is estimated that over a period of five years, the PLI Scheme for 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 global automotive trade.

The PLI Scheme for Auto sector is open to existing Automotive companies as well as new Non-Automotive investor companies (who are currently not in automobile or auto component manufacturing business). The scheme has two components viz Champion OEM Incentive Scheme and Component Champion Incentive Scheme.

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 Groupcompany(ies)will need to meet the Basic Eligibility criteria to receive incentives. New Non-Automotive Investor company or its Group company(ies)(who 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 31.03.2021. Besides the above eligibility criteria,Minimum New Cumulative Domestic Investment after 01.04.2021 has to be achieved by both the existing automotive companies as well as the New Non-Automotive investor company or its Group company(ies).The Champion OEMs (except 2W&3W) and New Non-Automotive Investor (OEM) company or its Group company(ies) have to invest Rs  2,000 crores over a period of 5 years.Similarly the Champion OEM (2W & 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 withthe Basic Eligibility Criteria at Table-I.
  • 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 Determined 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.
  • The scheme has followingcomponents:

Champion OEM Incentive Scheme:The Champion OEM Incentive scheme is a ‘sales value linked’ scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments and any other Advanced Automotive Technology vehicle prescribed by MHI depending upon technical developments.

  • Component Champion Incentive Scheme:The Component Champion Incentive scheme is a ‘sales value linked’ scheme, applicable on pre-approved Advanced Automotive Technology components of all vehicles, CKD/SKD kits, Vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors including automobile meant for military use and any other Advanced Automotive Technology components prescribed by MHI depending upon technical developments.
  • The list of Advanced Automotive Technology Vehicles and Advanced Automotive Technology Components can be modified by MHI from time to time depending upon technological developments.
  • Minimum 50% domestic value addition will be required and Phased Manufacturing Programme similar to FAME-II Scheme will be followed.
  • Pre-approval of eligible product will be done by Testing Agency of MHI as Advance Automotive Product as per the guidelines issued by MHI from time to time.
  • Any eligible product will be incentivized only for once – Component level or Vehicle level.
  • Incentive will be applicable on the Determined Sales Value which is defined as the incremental eligible sales of a particular year over the base year
  • For the Champion OEM incentive scheme, threshold Determined Sales Valuefor the first year is Rs 125 crores in respect of all companies viz. existing Automotive and New Non-Automotive Investor companies to claim incentives. Similarly,for the Component Champion incentive scheme, threshold Determined Sales Value for the first year is Rs 25 crore in respect of all companies viz. existing Automotive and New Non-Automotive Investor companies to claim incentives.
  • YoY growth of minimum 10% of the threshold Determined sales value (as mentioned above) for the first year,and thereafter for next4 years, has to be achieved to claim incentives.
  • In case the company fails to meet the threshold for Determined sales value in any given year, it will not receive any incentive for that year. However, it will still be eligible to receive the benefits under the scheme in the next year if it meets the threshold of Determined sales defined for that year subject to meeting condition of Minimum New Domestic Investment for the claim year.
  • Additional incentive of 2% will also be applicable to support high growth achievers.
  • The incentive payable for Champion OEM and New Non-Automotive (OEM) Investor company can range from 13% to 16%.
  • The incentive payable for Component Champion and New Non-Automotive (Component) Investor company ranges from 8% to 11% with an additional 5 % incentive for Battery Electric Vehicles & hydrogen fuel cell vehicle components.
  • Incentive slabs for Champion OEM and Component Champion of the scheme are at Table-II & IIIrespectively.
  • The incentives provided fully meet the cost disabilities with respect to the Advanced Automotive Technologies as projected by the industry.

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52 companies file applications for PLI Scheme for White Goods

September 16, 2021 News Desk Business Comments Off on 52 companies file applications for PLI Scheme for White Goods

A total of 52 companies have filed their application with committed investment of Rs 5,866 crore under the PLI scheme to incentivize the domestic manufacturing of components of White Goods (Air conditioners and LED lights), applications for which closed on 15 September, 2021. The PLI Scheme was notified on 16.04.2021.

Several companies like Daikin, Panasonic, Hitachi, Mettube, Nidec, Voltas, Bluestar, Havells, Amber, EPack, TVS-Lucas, Dixon, R K Lighting, Uniglobus, RadhikaOpto, Syska among others have applied for manufacturing critical components of Air conditioners and LED Lights.

Applications have been filed for production of components which are not manufactured in India presently with sufficient capacity. For Air Conditioners, several companies will be manufacturing compressors, copper tubing, aluminium stock for foils, control assemblies for IDU or ODU, Display units, BLDC motors among other components. Similarly, for LED Lights LED Chip packaging, LED Drivers, LED Engines, LED Light Management Systems, PCBs including metal clad PCBs and Wire wound inductors etc. will be manufactured in India.

The Union Cabinet chaired by Hon’ble Prime Minister has given approval to the Production-Linked Incentive (PLI) Scheme for White Goods (Air Conditioners and LED lights) to be implemented over FY 2021-22 to FY 2028-29 with an outlay of Rs. 6238 Crore on 7th April 2021. The Scheme was notified by DPIIT on 16.04.2021. The Scheme Guidelines were published on 4th June 2021. Online application have been received from 15th June 2021 till 15th September 2021. The selection of applicants will be done within 60 days from the date of closure of application window i.e. by 15.11.2021.

The PLI Scheme on White Goods is designed to create complete component ecosystem for Air Conditioners and LED Lights Industry in India and make India an integral part of the global supply chains. The Scheme shall extend an incentive of 4% to 6% on incremental sales for a period of five (5) years subsequent to the base year and one year of gestation period. Only manufacturing of components of ACs and LED Lights will be incentivized under the Scheme.

The Scheme will incentivize manufacturing of components of ACs and LED Lights. 90% Bill of Material (BoM) of ACs and 87% of BoM of LED Lights are covered under PLI Scheme. It will lead to increase in value addition in Country from 20% to 80-85% and developing a robust component eco-system for AC Industry and LED Lights Industry.

Selection of companies for the Scheme shall be done so as to incentivize manufacturing of components or sub-assemblies which are not manufactured in India presently with sufficient capacity. Mere assembly of finished goods is not being incentivized.

Over the next 5 years, the Scheme is expected to lead to total production of about INR 2,71,000 crore of components of ACs and LEDs. The scheme will bring additional investment in component manufacturing eco-system of ACs and LED Lights industry to the tune of INR 5,886 crore. 31 Companies have committed investments of about Rs 4995 cr for AC Components and 21 Companies have committed investments of Rs 871 cr for LED components.

The scheme will generate approx. 2 lakh direct and indirect employment opportunities in next 5 years.

Domestic Value Addition is expected to grow from the current 15-20% to 75-80%. […]