Lok Sabha Question No. 223 (STARRED), answered on 2021-12-14
Subject: PLI Scheme for Automobile Sector
Ministry: HEAVY INDUSTRIES
Asked by: Vishnu Dayal Ram, Reddeppa Nallakonda Gari

## GOVERNMENT OF INDIA MINISTRY OF HEAVY INDUSTRIES

## LOK SABHA STARRED QUESTION NO. 223 ANSWERED ON 14.12.2021

## PLI SCHEME FOR AUTOMOBILE SECTOR

## *223.  SHRI VISHNU DAYAL RAM: SHRI N. REDDEPPA :

Will the Minister of HEAVY INDUSTRIES भारी उद्योग मंत्री be pleased to state:

- (a) whether the Government has recently introduced Production Linked  Incentive (PLI) Scheme to encourage advanced automotive technologies in all sectors;
- (b) if so, the details thereof along with its salient features;
- (c) the objectives behind introduction of PLI scheme for automobile sector in the country and whether the scheme aligns itself with the goal of Aatmanirbhar Bharat;
- (d) the  details  of  the  eligible  applicants  under  the  scheme  and  process  for  application approval;
- (e) the details of investment received till date under PLI scheme;
- (f) whether the scheme is expected to boost production and adoption of electric vehicles in the country including Jharkhand and if so, the details thereof; and
- (g) whether the Government has an estimate of India's competitiveness at the global level in the automobile sector and if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE FOR HEAVY INDUSTRIES (SHRI KRISHAN PAL GURJAR)

(a) to (g): A statement is laid on the Table of the House.

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STATEMENT REFERRED TO IN REPLY TO PARTS (A) TO (G) OF LOK SABHA STARRED QUESTION NO. 223 FOR 14.12.2021 ASKED BY SHRI VISHNU DAYAL RAM AND SHRI N. REDDEPPA REGARDING 'PLI SCHEME FOR AUTOMOBILE SECTOR'.

(a) & (b): Yes Sir, Government has approved Production Linked Incentive (PLI) scheme on 15 th September, 2021 to encourage manufacturing of Advanced Automotive Technology (AAT) Products for Auto sector in India.  The salient features of this scheme are as under:

i) Budget outlay for this scheme is Rs. 25,938 crores ii) Tenure of this scheme is 5 years

iii) Incentive under the scheme will be applicable starting from F.Y. 2022-23 which will be disbursed in following F.Y. 2023-24 & so on for a total of five consecutive financial years.

iv) This scheme has two parts:

- 1)  Champion OEM incentive scheme
- 2)  Component Champion incentive scheme

v)  Both domestic as well export sales are eligible vi)  Advanced  Automotive  Technology  (AAT)  Products  with  minimum  50%  domestic value addition will be eligible for incentive under this scheme

vii) It is estimated that this scheme will attract large investment worth Rs. 42,500 crores over five-year period viii)This  scheme  will  help  in  generating  additional  employment  of  more  than  7.5  lakh during its tenure.

(c): The objectives behind introduction of PLI scheme for auto sector in the country is to boost  domestic  manufacturing  of  AAT  products  &  attract  investments  in  automotive manufacturing value chain.  Its prime objectives include overcoming cost disabilities, creating economies of scale and  building  up  a  robust  supply  chain  in  areas  of  AAT  products.    The scheme  will  facilitate  Indian  Automobile  Industry  to  move  up  the  value  chain  into  higher value  added  products.    This  scheme  is  aligned  with  the  goal  of  Aatmanirbhar  Bharat  by encouraging investment in setting up of manufacturing facilities for AAT products in India & incentivizing  AAT  products  with  minimum  50%  domestic  value  addition  under  this  PLI scheme.

(d) :  Auto  OEMs, Auto component Manufacturers & New non-automotive investors having Automobile  and  Auto  component  manufacturing  facility  in  India  and  meeting  eligibility criteria (attached in annexure) are eligible applicants under this scheme.

Online portal with the URL; https://pliauto.in  has been developed for administering this scheme including submission of online application.  Scrutiny & Appraisal for all online applications will be done by Project Management Agency (PMA).  Based on fulfillment of basic  eligibility  criteria,  approval  for  applicants  will  be  granted  by  Ministry  of  Heavy Industries.

(e): At  present,  window  for  receiving  online  application  through  the  Notice  Inviting Application is opened till 9 th January 2022 and scheme is applicable for F.Y. 2022-23, hence the detail of investments received under this scheme is not available.

(f): Yes, the scheme is focused to boost production of Electric Vehicles in India including Jharkhand.    It  is  estimated  that  this  scheme  will  help  in  incremental  production  of  Rs. 2,31,500 crore including electric vehicles.

- (g): Yes sir, the Government has an estimate of India's competitiveness at the global level in automobile sector.

India's ranking in the world market in terms of Unit Production is mentioned below:

-  2 wheelers, 3 wheelers and Tractors -  # 1
-  Passenger vehicle -  # 5
-  Commercial vehicles - # 5

Indian  Automotive  industry  has  succeeded  in mass  market  lower  value  low technology  products.    In  value  terms ,  Indian  Automotive  Industry  is ranked  #11 in  the world as we focus on mass market low technology products.

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## 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                                                        | AutoOEM                                                                                                  | 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. |

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.
2. (b) For new non-automotive investor company or its Group company(ies) that may want to participate in this scheme:

(c)

| 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 - (c) below.                                                              |

ANNEXURE

## 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 31 st 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)com pany 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 1 st 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.
6. (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.

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