Government Boosts Auto PLI Scheme Funding; Certification Delays Affect Some Models

Key Highlights:

• Ola Electric and Bajaj Auto have received domestic value addition (DVA) certificates under India's production-linked incentive (PLI) scheme.
• One-third of the models applied for DVA certification are still awaiting approval.
• The Indian government increased the PLI scheme allocation for the automotive industry to Rs 3,500 crore this year.
• To qualify for the PLI scheme, products must have at least 50% value added in India.
• Out of 74 vehicles submitted for certification, 50 have been approved, with the rest under evaluation.

Recently, OEMs such as Ola Electric and Bajaj Auto have announced that their products will receive domestic value-addition certifications as part of India's ambitious production-linked incentive scheme. However, roughly one-third of the models that applied for such certificates have yet to achieve them.

Increased Allocation in Union Budget

The government of India has significantly increased the allocation of the automotive industry's PLI scheme. In the Union Budget, the allocation was raised to ₹3,500 crore for the current year, up from ₹483.77 crore disbursed last year. This increase aims to further incentivize the production of vehicles and auto parts in India.

Certification Process and Requirements

To qualify for the PLI funds, the Automotive Research Association of India (ARAI) must certify that at least 50% of the product's value is added within India. This means that the cost of imported components and services should be less than 50% of the final product's value.

Current Status of Certifications

So far, out of the 74 vehicles submitted for DVA certification, 50 models have been approved. Tata Motors, Mahindra & Mahindra, and Bajaj Auto are among the companies that have submitted the highest number of applications. 

Bajaj Auto has received approvals for all 13 models it submitted, while Tata Motors and Mahindra & Mahindra are still waiting for several of their models to be approved. Mahindra & Mahindra has received permission for sixteen.

TVS Motors has applied for five products, two of which have been approved by the government, whereas Eicher Motors has applied for one product under the plan but has yet to gain official permission.

According to a recent economic study given in the Lok Sabha, the Auto PLI plan has about 67,690 crore in total investments, with capital investment under the scheme reaching Rs 14,043 crore by March 2024.

Efforts to Speed Up the Process

Officials from ARAI are working hard to ensure that the application process for these certificates is completed within four months. However, due to the detailed nature of the certification process, it sometimes takes longer. Reji Mathai, Director at ARAI, mentioned that they aim to complete the process in less than three months.

Other Developments in the PLI Scheme

The PLI scheme has attracted substantial investments, with a total of ₹67,690 crore committed so far. The scheme is divided into two categories: the Champion OEM Incentive Scheme and the Component Incentive Scheme.

In the component scheme, Sona Comstar has been approved by the government to produce wheel rims with built-in hub motors and traction motors.

Toyota Kirloskar Auto Parts has been authorized to manufacture trans-axles for electric vehicles. Meanwhile, Delphi TVS has received approval to supply pumps for CRDI engines that operate at 1800 bar and above.

Also Read: Government Proposes Zero-Toll for Zero-Emission Trucks

CMV360 Says

The increased allocation for the PLI scheme reflects the government's commitment to strengthening India's automotive sector. However, the delay in DVA certifications for some models highlights the challenges in meeting the scheme's stringent requirements. Streamlining the certification process could help manufacturers fully leverage the benefits of this initiative.