Mumbai: Automakers which can be a part of the federal government’s ₹25,938-crore production-linked incentive (PLI) scheme for the sector have sought clarification on whether or not the funding timeline has been prolonged according to the one-year extension of the scheme, in line with business executives.
To align with the prolonged incentive disbursement interval, firms have urged the federal government to additionally prolong the funding timeline of the scheme by a yr.
The five-year PLI scheme for superior automotive applied sciences (PLI-AAT), as it’s formally identified, was prolonged by a yr in late December, after not one of the taking part firms might avail of advantages within the first yr of the scheme ending March 2023 (FY23).
The scheme now successfully runs from FY24 to FY28, with incentives to be disbursed following the conclusion of every monetary yr.
Authentic scheme paperwork required the taking part firms to make new investments yearly between FY23 and FY27. The minimal funding to be made yearly was additionally outlined within the coverage as per the classification of the applicant firm.
If firms fail to make the minimal required funding for a given yr, they’re disqualified from getting any advantages that yr.
When the brand new scheme timeline was introduced in December, there was no point out of any adjustments to the funding timeline, business executives mentioned. Firms that missed adhering to the unique funding timeline and didn’t make the required investments in FY23 are actually involved if they’ll get any incentives for the continued monetary yr.
“The federal government has understood the business’s want and prolonged the scheme by one yr. However in addition they ought to delay the funding fulfilment standards by one yr with out impacting the overall scheme outlay,” mentioned Sudhir Mehta, chairman, Pinnacle Mobility Options (EKA), which is without doubt one of the applicant firms below the PLI-AAT scheme.
“Firms cross on the advantages of decrease prices to shoppers in lieu of the scheme. The inducement quantity involves us later. If we’re not positive whether or not we are going to get the motivation, how can we take the chance of passing on the advantages to shoppers?” Mehta mentioned.
He argued that the design and validation of the hundreds of elements wanted to develop a brand new electrical car ground-up in India takes time and so does the supply of specialized plant and equipment required for manufacturing it, underscoring the necessity for an extension of the funding timeline too.
The heavy industries ministry, which is overseeing the scheme, didn’t reply to Mint’s request for a remark.
Saurabh Agarwal, companion and auto tax chief at EY, mentioned that whereas the current extension of the scheme interval by one yr has given much-needed reduction to the auto business, “The business can be anticipating a commensurate extension of the funding interval timelines as a number of firms have struggled to satisfy their funding commitments owing to varied know-how adoption challenges.”
Round 85 firms have certified for the PLI-AAT scheme. Nevertheless, solely three firms have been in a position to get their autos licensed for the scheme up to now. These are Tata Motors, Mahindra and Mahindra and Ola Electrical. A number of different firms are within the means of getting these certifications, mentioned individuals within the know. Disbursal of incentives is predicted to begin subsequent monetary yr onwards.
The PLI-AAT scheme appears to be like to advertise the manufacturing of latest know-how merchandise in India, particularly electrical autos. The scheme goals to spice up your complete worth chain together with part makers and car producers.
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Printed: 11 Feb 2024, 07:15 PM IST
Supply: Live Mint