Production Linked Incentive
(PLI) Scheme for Automobile and Auto Component Industry with Budgetary Outlay
of Rs. 25,900 crs Released
[Ministry
of Heavy Industries Notification S.O. 3946(E) dated 23rd
September, 2021]
Subject: Production Linked Incentive (PLI) Scheme For
Automobile and Auto Component Industry.
1. Introduction
2. Objective
3. Salient Features of the
Scheme
4. Incentive Outlay
5 Basis
of Computation
6
Mechanism
7. Guidelines to the Scheme
8. PLI Scheme for Drone and Drone components
1.
Introduction:
Government
has approved the Production Linked Incentive (PLI) Scheme for Automobile and
Auto Components Industry in India for Enhancing India’s Manufacturing
Capabilities for Advanced Automotive Products with a budgetary outlay of Rs. 25,938 crore.
2.
Objective:
The
Production Linked Incentive (PLI) Scheme for Automobile and Auto components
proposes financial incentives to boost domestic manufacturing of Advanced
Automotive Technology products and attract investments in the automotive
manufacturing value chain. Its prime objectives include overcoming cost
disabilities, creating economies of scale and building a robust supply chain in
areas of Advanced Automotive Technology products. It will also generate
employment. This scheme will facilitate the Automobile Industry to move up the
value chain into higher value added products.
3.
Salient Features of the Scheme:
3.1
Scheme Components: The
scheme consists of two components incentivizing incremental sales of automobile
and auto components related to Advanced Automotive Technology.
3.2
Eligibility: The
applicant company or its Group company(ies)will need to meet the following common criteria to
qualify and receive benefits under the Scheme:
Basic
Eligibility Criteria:
(a)
For company or its Group company(ies) with existing
presence in India or globally in the Automotive vehicle and components
manufacturing business:
|
Eligibility Criteria |
Auto OEM |
Auto-Component |
|
Global group* Revenue (from automotive and/or auto
component manufacturing) |
Minimum ₹ 10,000 crore. |
Minimum ₹ 500 crore. |
|
Investment |
Global Investment of Company or its Group* Company(ies) in fixed assets
(gross block) of ₹ 3,000 crore. |
Global Investment of Company or its Group* Company(ies) in fixed assets
(gross block) of ₹150 crore. |
*Group
Company(ies) shall mean two
or more enterprises which, directly or indirectly, are in a position to:
Exercise
twenty-six percent or more of voting rights in the other enterprise;
Or
Appoint
more than fifty percent of members of Board of Directors in the other
enterprise. (As defined in the FDI Policy Circular of 2020)
Note:
i. Above Eligibility criteria to be met based on audited financial statements for year ending
March 31, 2021.
ii.
An applicant company or its Group company(ies) must satisfy the
entire eligibility criteria to be eligible under the scheme.
(b)
For new non-automotive investor company
or its Group company(ies)
that may want to participate in this scheme:
|
Eligibility Criteria |
New Non-Automotive investor company or its Group
company(ies) (who are currently not in automobile
or auto component manufacturing business) |
|
Global net worth |
₹ 1000 crore based on audited financial
statements for year ending March 31, 2021. |
|
Committed investment in India over five year period |
As per Minimum New Domestic Investment Conditions
mentioned in para –3.2(c) below. |
Note :
i. Non-Automotive company or its Group company(ies) can qualify for this scheme provided they present a
clear business plan to invest in India and generate revenues from Advanced
Automotive Technology vehicles or Advanced Automotive Technology components
manufacturing.
ii.
The applicant new Non-Automotive Investor company or its Group company(ies) will be eligible to
claim incentive subject to meeting cumulative minimum new domestic investment
to be achieved for a particular year. The applicant will also have to meet the % Year on Year growth criteria from the minimum threshold
fixed from the first year.
iii. New Non-Automotive Investor company
or its Group company(ies) will be defined as those
who have no revenue from manufacturing of Automobile or auto- components as on
31st March 2021.
iv.
An applicant new Non-Automotive Investor company or its Group company(ies) must satisfy the
entire eligibility criteria.
(c)
Minimum New Domestic Investment Conditions:
Cumulative
New Domestic Investment Condition of Performance (₹ Crore)
|
Cumulative
new domestic investment to be achieved |
Champion
OEM (Except 2W & 3W) |
Champion
OEM 2W & 3W |
Component
Champion |
New
Non-Automotive investor(OEM) company or its Group company(ies) |
New
Non-Automotive investor (Component)company or its Group company(ies) |
|
Upto or before March 31, 2023 |
300 |
150 |
40 |
300 |
80 |
|
Upto or before March 31, 2024 |
800 |
400 |
100 |
800 |
200 |
|
Upto or before March 31, 2025 |
1400 |
700 |
175 |
1400 |
350 |
|
Upto or before March 31, 2026 |
1750 |
875 |
220 |
1750 |
440 |
|
Upto or before March 31, 2027 |
2000 |
1000 |
250 |
2000 |
500 |
Note :
i. New investments should be made from
the same legal entity as the one applying for the incentive.
ii.
Cumulative new domestic investment made starting 1st April 2021 shall be considered under this condition.
iii.
The approved Company is required to meet the cumulative investment condition
for each year.
iv.
In the event, any approved company meets the investment condition few years
before the end of the scheme; it will be eligible for incentives throughout the
tenure of the scheme subject to meeting other conditions of the scheme.
v.
In case the approved 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.
(d)
Preference will be given to eligible company or its Group company(ies) committing to front load their investment during the
scheme period. Proposed investment commitment will be
evaluated by calculating the Net Present Value (NPV) of the investment
using the bank rate as the discounting factor.
3.3
Details of the Scheme
The
Scheme has two components namely, Champion OEM Incentive Scheme& Component
Champion Incentive Scheme.
Any Automotive OEM company or its Group
company(ies) and New
Non-Automotive Investor company or its Group company(ies)
are eligible to apply for both the components of the scheme.
3.3.1
General Details of the Scheme
3.3.1.1
Tenure of the Scheme
i. Incentive under the scheme will be applicable, starting
from the Financial Year 2022-23 which will be disbursed in the following
Financial Year i.e. 2023-24 and so on for a total of five(05)
consecutive Financial Years.
ii.
An approved applicant shall be eligible for benefits for 5
consecutive Financial Years but not beyond for the Financial Year ending
31/03/2027.
iii.
Base Year: Financial Year 2019-20 shall be treated as the base year for calculation of eligible sales value (not applicable for approved New
Non-Automotive Investor Company).
3.3.1.2
Eligible Sales Value and Determined Sales Value under the Scheme:
I.
Eligible Sales Value for Vehicle
Segment: Total sales (Net
of GST) for eligible vehicles.
II.
Eligible Sales Value for
Component Segment: Total
sales (Net of GST) for eligible components Or apportioned value of eligible component
as determined by Testing Agency of MHI.
III.
Determined Sales Value for
Vehicle Segment:(Eligible Sales Value for Vehicle Segment for a particular
year) minus (Eligible Sales Value for Vehicle Segment for Base year).
IV.
Determined Sales Value for
Component Segment :(Eligible Sales Value for Component Segment for a
particular year) minus (Eligible Sales Value for Component Segment for Base
year).
3.3.1.3
The scheme is
designed to incentivize Advanced Automotive Technology products only viz eligible Advanced Automotive product on standalone
basis at component level or in integration with the vehicle having appropriate
value apportionment on the vehicle side. Therefore, an
approved legal entity as Automotive OEM company or New Non-Automotive Investor
company can avail incentives under both components of the scheme subject to the
condition that any eligible product shall be incentivized only once under the scheme.Any double claim of incentive for the same product
under component level and vehicle level can lead to disqualification of the
legal entity/entities involved on this ground alone in addition to any other
legal action as applicable under the law.
3.3.2
Champion OEM incentive scheme
3.3.2.1
Overview:
I.
An incentive scheme targeted to address the cost disabilities related to
Advanced Automotive Technology vehicles faced by OEMs.
II.
The Champion OEM Incentive scheme is a ‘sales value linked’ scheme, applicable
on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments –
2 wheelers, 3 wheelers, passenger vehicles, commercial vehicles, Tractors, Automobile
meant for Military use and any other Advanced Automotive Technology vehicle as
prescribed by MHI depending upon technical developments.
III.
Target Segment: Automotive OEM company or its Group company(ies) and new
Non-Automotive Investor company or its Group company(ies).
3.3.2.2
Eligibility:
I.
Eligible companies as per para 3.2above who meet the
criteria mentioned below will qualify for incentives under the Champion OEM
Incentive Scheme:
· Automotive OEM company or its Group company(ies) and new Non-Automotive
Investor company or its Group company(ies) will be
eligible to apply for the Champion OEM incentive scheme.
· Growth incentives (%
of benefits) are applicable on Determined Sales Value.
II.
The list of Advanced Automotive Technology vehicles like Battery Electric
Vehicles (BEV), Hydrogen Fuel Cell Vehicles etc will be prescribed by MHI from time to time depending upon
technological developments.
III.
The approved applicants will apply for registration of their products as
eligible Advanced Automotive Technology vehicles to seek incentive in this
scheme.
IV.
Pre-approval of eligible product will be done by Testing Agency of MHI as
Advanced Automotive Technology Product as prescribed by MHI from time to time.
V.
Minimum 50% domestic value addition will be required. Phased Manufacturing Programme similar to FAME-II Scheme will
be followed. Methodology of determination of domestic value addition
will be same as in FAME scheme. Testing Agency of MHI will certify domestic
value addition in the eligible product.
VI.
Pre-approved eligible product with minimum 50% domestic value addition will be
eligible for incentive under this scheme.
VII.
Testing Agency will ascertain the value of Advanced Automotive Technology
components to be assigned/apportioned for the purpose of eligible sales value
under the scheme.
3.3.2.3
Scheme Incentive Mechanism
I.
The approved applicants will be entitled to receive incentives (% benefit) on Determined Sales Value subject to meeting
other conditions of the scheme.
II.
For the approved New Non-Automotive Investor company
(who is currently not in automobile or auto component manufacturing business)
eligible sales value in the base year will be taken as zero.
III.
Threshold Determined Sales Value for the first year is₹125 crore in respect
of all companies viz. existing Automotive and New Non-Automotive Investor
companies under this component of the scheme to claim incentive.
IV.
Year on Year (YoY) growth of minimum 10% in Determined Sales Value of first
year i.e ₹125 crore has to be
achieved by all approved companies viz. existing Automotive and New
Non-Automotive Investor companies, to become eligible to receive incentive.
V.
In case the approved company fails to meet the threshold for increase in
Determined Sales Value over the threshold for the first year i.e₹125
crore, for 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 for that particular year calculated on the basis of 10% YoY growth over the threshold for the
first year and thereafter for 4 consecutive years from when the incentive under
the scheme becomes applicable (FY 2022-23). This provision will provide level
playing field to all approved companies viz. existing Automotive and New
Non-Automotive Investor companies as well as safeguard the approved applicants
who preferred to front load their investment, against adversities of the market
demand conditions in subsequent years of the scheme.
VI.
The approved Companies that achieve a target cumulative increase in Determined sales of ₹ 10,000 crore across the duration
of the scheme will receive an additional incentive of 2%. This additional2% incentive is applicable on the cumulative
increase in Determined Sales Value in excess of ₹ 10,000 crore.
VII.
Incentive proposed under this scheme to Electric vehicle manufacturers will be
independent of the incentives given under FAME II scheme where incentives are provided to customers who buy the vehicles and not to
the manufacturers. Incentives can be claimed under this scheme for Battery
Electric vehicles having Advanced Chemistry Cell (ACC) batteries for which
incentives have been claimed under the PLI scheme for ACC.
VIII.
Incentive Slabs for Champion OEM and New Non-Automotive (OEM) Investor company:
Table
1: Incentive Slabs for Champion OEM and New Non-Automotive (OEM)
|
Investor
Company |
|
|
Determined Sales Value (in ₹ Crore) |
Incentives (%age of Determined Sales Value) |
|
<= 2,000 |
13% |
|
> 2,000 to 3,000 |
14% |
|
> 3,000 to 4,000 |
15% |
|
> 4,000 |
16% |
|
Cumulative Determined
Sales Value of ₹10,000 Crore over 5 years |
Additional 2% |
Note:
- i. Only
those Battery Electric Vehicles will be eligible for incentives
which meet the performance criteria of FAME-II scheme or as notified
from time to time by MHI.
3.3.3
Component Champion incentive scheme
3.3.3.1
Overview:
I.
The ‘Component Champion’ Incentive scheme is aimed at identifying and
incentivizing Auto-component champions that can achieve global scale of
operations and become ‘Automotive Champions’ for the auto-component
manufacturing sector related to Advanced Automotive Technology.
II.
The Component Champion Incentive scheme is a ‘sales value linked’ scheme, applicable
on preapproved 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.
III.
Target Segment: Auto-component manufacturing company or
its Group company(ies),
Automotive OEM company or its Group company(ies) and
new Non-Automotive Investor company or its Group company(ies).
3.3.3.2
Eligibility:
I.
Eligible companies as per para 3.2 above who meet the criteria mentioned below
will qualify for incentives under the Component Champion Incentive Scheme:
· Auto-component manufacturing company or
its Group company(ies),
Automotive OEM company or its Group company(ies) and
new Non-Automotive Investor company or its Group company(ies)
will be eligible to apply for the Component Champion incentive scheme.
· Growth incentives (%
of benefits) are applicable on Determined Sales Value.
II.
The list of eligible Advanced Automotive Technology components will be prescribed by MHI. The list can be
amended by MHI from time to time depending upon technological
developments.
III.
The approved applicants will apply for registration of their products as
eligible Advanced Automotive Technology components to seek incentive in this
scheme.
IV.
Pre-approval of eligible product will be done by
Testing Agency of MHI as Advanced Automotive Technology components as prescribed
by MHI from time to time.
V.
Minimum 50% domestic value addition will be required. Phased Manufacturing Programme similar to FAME-II Scheme will
be followed. Methodology of determination of domestic value addition
will be same as in FAME scheme. Testing Agency will certify domestic value
addition in the eligible product.
VI.
Pre-approved eligible product with minimum 50% domestic value addition will be
eligible for incentive under this scheme.
VII.
Testing Agency will ascertain the value of Advanced Automotive Technology
components to be assigned/apportioned for the purpose of eligible sales value
under the scheme.
3.3.3.3
Scheme Incentive Mechanism
I.
The Approved applicants will be entitled to receive
incentives (% benefit) on the Determined Sales Values of Advanced Automotive
Technology components subject to meeting other conditions of the scheme.
II.
For the approved New Non-Automotive Investor company
(who is currently not in automobile or auto component manufacturing business)
eligible sales value in the base year will be taken as zero.
III.
Threshold Determined Sales Value for the first year is₹ 25 crore in
respect of all companies viz. existing Automotive and New Non-Automotive
Investor companies under this component of the scheme to claim incentive.
IV.
Year on Year (YoY)growth of minimum 10% in Determined Sales Value of the first
year i.e. ₹ 25 crore has to be achieved by all approved companies viz.
existing Automotive and New Non-Automotive Investor companies, to become eligible
to receive incentive.
V.
In case the approved company fails to meet the threshold for increase in
Determined Sales Value over the threshold for the first year i.e₹ 25 crore, for 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 for that particular year calculated on the basis of
10% YoY growth over the threshold for the first year and thereafter for 4
consecutive years from when the incentive under the scheme becomes applicable
(FY 2022-23). This provision will provide level playing field to all approved
companies viz. existing Automotive and New Non-Automotive Investor companies as
well as safeguard the approved applicants who preferred to front load their
investment, against adversities of the market demand conditions in subsequent
years of the scheme.
VI.
The approved Companies that achieve a target cumulative increase in Determined
Sales Value of ₹1250 crore across the duration of the scheme will receive
an additional 2% incentive. This 2% additional incentive is applicable on the
cumulative increase in Determined Sales Value in excess of ₹1250 crore.
VII.
Additional incentive has also been provided for
components of Battery Electric Vehicles (BEV) and Hydrogen fuel cell vehicles
in order to promote future technology vehicles.
VIII.
Incentive slab for Component Champion Incentive Scheme:
Table
2 :Incentive slab for Component Champion and New
Non-Automotive (Component)
|
Investor
Company |
|
|
Determined Sales Value (in ₹ Crore) |
Incentives (%age of Determined Sales Value) |
|
<= 250 |
8%* |
|
> 250 to 500 |
9%* |
|
> 500 to 750 |
10%* |
|
> 750 |
11%* |
|
Cumulative Determined
Sales Value of ₹1,250 Crores over 5 years. |
Additional 2% |
|
Battery Electric vehicles
& Hydrogen fuel cell vehicles components |
Additional 5% |
*Multiplied
by a factor of 0.9 in the fifth year for eligible sales relating to Internal
Combustion Engine (ICE) vehicle components.
Note:
- i. On an annual basis, the approved
company under the Component Champion Scheme will have to
separately report break up of sales value of components specific to
Battery-EV and Hydrogen fuel Cell vehicle produced in India.
4.
Incentive Outlay
4.1
Total Incentive: The
expected annual incentive outlay and total incentive outlay under the Scheme is
as given below:
Table
3: Incentive outlay
|
Applicable Incentive (Financial Year) |
Disbursement of Incentive (Financial Year) |
Total Incentive (₹ Crore) |
|
2022-23 |
2023-24 |
604 |
|
2023-24 |
2024-25 |
3,150 |
|
2024-25 |
2025-26 |
5,925 |
|
2025-26 |
2026-27 |
7,199 |
|
2026-27 |
2027-28 |
9,060 |
|
Total |
25,938 |
|
Note:
i. The yearly incentive payouts are indicative and can be changed depending upon the sales/market scenario, within
the overall Financial Outlay.
ii.
This is a fund limited scheme. The total incentive
payout during 5 years of the scheme will be capped at ₹25,938 crore. In case the calculated
incentive payout exceeds the budget, it will be reduced
on pro-rata basis as per the formulation developed across all PLIs.
iii.
Distribution of incentive may differ from estimates, depending on the number of
beneficiaries etc.
iv.
The administrative expenses for the scheme will be absorbed within the overall
limit of ₹25,938 crore.
4.2
Incentive per company
I.
Under the ‘Champion OEM’ Incentive Scheme’ the incentive per company will
depend on the Determined Sales Value of vehicles related to Advanced Automotive
Technology subject to meeting the criteria of cumulative new domestic
investment, and Year on Year growth.
II.
Under the ‘Component Champion’ Incentive Scheme’ the incentive per company will
depend on the Determined Sales Value of Advanced Automotive Technology
components manufactured in India, subject to meeting the criteria of cumulative
new domestic investment, and Year on Year growth.
4.3
Spillover between different components of the scheme
The
scheme is designed to incentivize Advanced Automotive
Technology products only viz eligible Advanced
Automotive product on standalone basis at component level or in integration
with the vehicle having appropriate value apportionment on the vehicle side.
Therefore, an approved legal entity as Automotive OEM company or New
Non-Automotive Investor company can avail incentives under both components of
the scheme subject to the condition that any eligible product shall be
incentivized only once under the scheme. Any double claim of incentive for the
same product under component level and vehicle level can lead to
disqualification of the legal entity/entities involved on this ground alone in
addition to any other legal action as applicable under the law.
4.4
Maximum incentive per company
Total
Incentive per entire Group company(ies)
is capped at ₹ 6,485crore(25% of total incentives outlay under this
Scheme). The cap on incentive payable to the approved company or Group of company(ies) as stated above would
be incorporated as part of the agreement.
4.5
To retain flexibility in the
implementation of the scheme, the scheme proposes fungibility
of funds within and across the components of the scheme.
4.6
Incentive payable under this scheme to
Electric vehicle manufacturers will be independent of/in addition to the
incentives given under FAME-II scheme where incentives are
provided to customers who buy the vehicles and not to the manufacturers.
Under this PLI scheme, incentives are being given to
manufacturers not the consumers.
4.7 Incentives may also be claimed under
this scheme for vehicles having Advanced Chemistry Cell (ACC) batteries for
which incentives have been claimed under the PLI scheme for ACC because Battery
Electric vehicle (BEV) manufacturers have the freedom to source ACC batteries
from anywhere and in case this incentive is not allowed, they may resort to
imports of ACC batteries for cost cutting.
5
Basis of Computation :
The
assessment shall be based on details furnished to the
Departments / Ministries/ Agencies, and Statutory Auditor certificates.
6 Mechanism
6.1
Nodal Agency
6.1.1
The Scheme shall be
implemented through a Nodal Agency. Such Nodal Agency shall act as a
Project Management Agency (PMA) and be responsible for providing secretarial,
managerial and implementation support and carrying out other responsibilities,
as assigned by MHI from time to time. For carrying out activities related to
the implementation of the Scheme, PMA would inter-alia be responsible for:
6.1.2. Appraisal of applications and
verification of eligibility for support under the Scheme.
6.1.3
Examination of claims eligible for
disbursement of incentives under the Scheme.
6.1.4
Compilation of data regarding progress
and performance of the Scheme, including cumulative domestic investment and
incremental eligible sales of goods for companies.
6.1.5
To keep a check on any diversions
arising out of any change in accounting policy or duplication of benefits on
account of same activity under different Schemes.
6.1.6
To avoid any duplication and formation
of multiple committees, the Administrative Mechanism created under FAME-II
scheme in MHI will be used for granting approvals
under Production Linked Incentive (PLI) Scheme for Automobile and Auto
components.
6.2
Audit: The scheme shall
have provision for cost audit by External Auditor (Cost or Chartered
Accountant) appointed by MHI and the expenses will be met within the allocation
of the scheme.
6.3 Monitoring of the PLI scheme
and power to remove difficulties: As
approved by the Cabinet on 11th November 2020, the Empowered Group of
Secretaries (EGoS) chaired by Cabinet Secretary
(constituted by the Cabinet vide Gazette notification dated 10.06.2020) will
monitor the PLI scheme, undertake periodic review of the outgo under the
scheme, ensure uniformity of all PLI Schemes and take appropriate action to
ensure that the expenditure is within the prescribed outlay. In addition, any changes required in
the modalities of the scheme mentioned above subject to the condition that the
overall financial outlay remain within ₹ 25,938 crore, will be placed for
consideration of EGoS.
6.4
Approval and Disbursement of Incentive
I. Application under the Scheme can be
made by any company registered in India.
II.
An initial application, complete in all aspects, will have to be submitted before the due date. Acknowledgement will be issued after initial scrutiny of the application.
The acknowledgement shall not be construed as approval
under the Scheme.
III.
The incentives shall be released to eligible
applicants, meeting the required thresholds and whose disbursement claims are
found to be in order.
IV.
Incentives under the Scheme will be applicable, starting from the Financial
Year 2022-23 which will be disbursed in the following
Financial Year i.e. 2023-24, and so on for a total of 5 consecutive Financial
Years.
V.
The scheme will be data driven to ensure transparency, automaticity and prompt
disbursement of incentives. The data will be captured
in seamless manner and will make use of respective HS codes.
7.
Guidelines to the Scheme
For
the effective operation and smooth implementation of the Scheme, the detailed
guidelines shall be notified separately. The
guidelines are to be read along with the scheme. In
case of any inconsistency between the scheme and the guidelines, the provisions
of the scheme shall prevail.
8. PLI Scheme for Drone and Drone components
The
PLI scheme for Drone and Drone components shall be separately
notified / published by Ministry of Civil Aviation (MoCA).
[F. No. 12(11)/2020-AEI (21370)]