Automakers that participate in the government’s ₹25,938-crore production-linked incentive (PLI) program for the industry have inquired as to whether the investment timeframe has been prolonged in accordance with the program’s one-year extension.
Companies have pushed the government to prolong the scheme’s investment timeframe by a year in order to coincide with the extended incentive payment period.
In late December, the PLI scheme for advanced automotive technologies, or PLI-AAT, which was initially set to expire on March 20, 2023 (FY23), was extended by one year since none of the participating companies were able to take advantage of its benefits.
The original scheme documentation mandated that, between FY23 and FY27, member enterprises make additional investments annually. The regulation also specified the annual minimum investment required based on the applicant company’s categorization.
“The government has understood the industry’s need and extended the scheme by one year. But they also should delay the investment fulfilment criteria by one year without impacting the total scheme outlay,” stated Sudhir Mehta, chairman at Pinnacle Mobility Solutions (EKA).
“Companies pass on the benefits of lower costs to consumers in lieu of the scheme. The incentive amount comes to us later. If we are not sure whether we will get the incentive, how can we take the risk of passing on the benefits to consumers?” Mehta added.
He maintained that the development of a new electric vehicle from the ground up in India requires time for the design and validation of thousands of parts, as well as for the delivery of specialized plant and machinery needed for manufacturing.
Saurabh Agarwal, associate and auto tax leader at EY, stated, “The industry is also expecting a commensurate extension of the investment period timelines as several companies have struggled to meet their investment commitments owing to various technology adoption challenges.”
These are Tata Motors, Mahindra and Mahindra and Ola Electric. Several other companies are in the process of getting these certifications, said people in the know. Disbursal of incentives is expected to start next financial year onwards.
