New Delhi, October 11 (KNN) The government plans to overcome the cost handicaps of the industry for manufacturing advanced automotive technology products in India with the PLI program for automotive and automotive components. Its guidelines were notified in the India Gazette on 23.09.2021.

It is estimated that over a period of five years, the PLI program for the automotive and automotive components industry will result in new investments of over INR 42,500 crore, additional production of over INR 2.3 lakh crore and create opportunities. additional employment of over 7.5 lakh jobs.

Under this program, the incentive payable for Component Champion and New Non-Automotive Investor company varies from 8% to 11%.

The incentive structure will encourage the industry to make new investments in the indigenous global supply chain of advanced automotive technology products.

The Automotive PLI program is open to existing automotive companies as well as new companies of non-automotive investors (who are not currently active in the manufacture of automobiles or automotive components). The program has two components, namely the Champion OEM Incentive Program and the Champion Component Incentive Program.

The automotive and automotive components regime will be implemented over a five-year period beginning in fiscal year 2022-2023.

– An approved claimant will be eligible for benefits for 5 consecutive fiscal years.

– The 2019-20 financial year will be considered as the base year for the calculation of eligible sales.

– An existing automobile company or its group company (ies) will have to meet the basic eligibility criteria to receive incentives. The new non-auto investor firm or its affiliate (s) (which are not currently engaged in manufacturing automobiles or auto components) must meet the global net worth criteria of INR 1,000 crore. The basic eligibility criteria are based on the audited financial statements for the year ended 31.03.2021. In addition to the above eligibility criteria, the new minimum cumulative domestic investment after 01.04.2021 must be met by both existing car manufacturers as well as the new non-car investment company or company (s) of his group. Champion OEMs (except 2W and 3W) and the new non-automotive investor (OEM) company or its group company (s) must invest INR 2,000 crore over a period of 5 years. Likewise, Champion OEM (2W and 3W), Component Champion and New Non-Automotive Investor (Component) company or its group company (s) must invest 1000 crore INR, 250 crore INR and 500 crore INR respectively, as detailed with the Basic Eligibility Criteria in Table-I.

– If the company does not meet the condition of cumulative domestic investment in a given year, it will not receive any incentive for that year even if the determined sales value threshold is reached. However, he will still be able to benefit from the benefits of the scheme in subsequent years if he meets the cumulative domestic investment condition defined for that year.

—– The diagram includes the following:

– Champion OEM Incentive Program: The Champion OEM Incentive Program is a “sales value linked” program, applicable to battery electric vehicles and hydrogen fuel cell vehicles of all segments and to any another vehicle of advanced automotive technology prescribed by MHI based on technical developments.

– Component Champion Incentive Scheme: The Component Champion Incentive Scheme is a “sales value linked” program, applicable on pre-approved advanced automotive technology components of all vehicles, CKD / SKD kits, vehicle aggregates 2-wheel, 3-wheel, passenger vehicles, utility vehicles and tractors, including automobiles intended for military use and any other component of advanced automotive technology prescribed by MHI based on technical developments.

– The list of advanced automotive technology vehicles and advanced automotive technology components may be changed by MHI from time to time according to technological developments.

– A minimum national added value of 50% will be required and a phased manufacturing program similar to the FAME-II program will be followed.

– Pre-approval of the qualifying product will be performed by MHI’s testing agency as an advanced automotive product, in accordance with guidelines issued by MHI from time to time.

– Any qualifying product will only be incentivized once – at component level or at vehicle level.

– The incentive will be applicable on the determined sales value which is defined as the additional eligible sales of a particular year during the base year

– For Champion OEM incentive program, the sales value threshold determined for the first year is INR 125 crores for all companies viz. existing auto companies and new non-auto investors to claim incentives. Likewise, for the Component Champion incentive program, the sales value threshold determined for the first year is INR 25 crore for all companies, viz. existing auto companies and new non-auto investors to claim incentives.

– Year-over-year growth of at least 10% of the threshold The value of sales determined (as mentioned above) for the first year, and thereafter for the following 4 years, must be achieved to qualify for the incentives.

– If the business does not meet the determined sales value threshold in a given year, it will not receive any incentive for that year. However, he will still be eligible to receive the benefits of the scheme the following year if he reaches the determined sales threshold defined for that year subject to fulfilling the condition of new minimum national investment for the year of application.

– An additional 2% incentive will also be applicable to support high growth people.

– The incentive payable for Champion OEM and New Non-Automotive (OEM) Investor Company can range from 13% to 16%.

– The incentive payable for Component Champion and New Non-Automotive (Component) Investor Company ranges from 8% to 11% with an additional 5% incentive for battery electric vehicles and hydrogen fuel cell vehicle components .

– The incentive tiles for Champion OEM and Component Champion in the program can be found in Tables II and III, respectively.

– The incentives provided fully respond to the cost handicaps with regard to advanced automotive technologies as projected by the industry.

~ Table – I

Basic eligibility criteria:

— a). For the company or companies of its group already present in India or in the world in the sector of the manufacturing of vehicles and automotive components:

* Group company (ies) means two or more companies which, directly or indirectly, are able to:

~ Exercise twenty-six percent or more of the voting rights in the other company;

Or

~ Name more than fifty percent of the other company’s board members. (As defined in the 2020 FDI Policy Circular)

— To note:

I. Above Eligibility criteria to be met on the basis of the audited financial statements for the year ending March 31, 2021.

— ii. A candidate company or its Group company (ies) must meet all the eligibility criteria to be eligible for the scheme.

–b). For the new non-automotive investing company or its Group company (ies) wishing to participate in this system:

— To note:

I. A non-automotive company or its group companies can benefit from this program provided they have a clear business plan to invest in India and generate income from advanced automotive technology vehicles or automotive technology component manufacturing. advanced.
— ii. The new applicant non-automobile investment company or its group company (ies) may claim an incentive subject to the realization of a new minimum cumulative national investment to be made for a given year. The candidate must also meet the criteria for growth in% from one year to the next from the minimum threshold set from the first year.
— iii. New non-automotive investor companies or their group company (s) will be defined as those that have no sales from the manufacturing of automobiles or automotive components as of March 31, 2021.
— iv. A new applicant non-automotive investment company or its Group company (ies) must meet all the eligibility criteria.

–vs). Minimum conditions for new national investments:

Performance condition of new cumulative national investments (Rs in crore)

— To note:

– New investments must be made from the same legal entity as the one requesting the incentive.
– New cumulative national investments made from April 1, 2021 will be taken into account in this condition.
– The approved Company is required to fulfill the cumulative investment condition for each year.
– In the event that any approved company fulfills the investment condition a few years before the end of the system; he will be eligible for incentives for the duration of the plan, subject to fulfilling other conditions of the plan.
– If the approved company does not meet the condition of cumulative domestic investment in a given year, it will not receive any incentive for that year even if the determined sales value threshold is reached. However, he will still be able to benefit from the benefits of the scheme in subsequent years if he meets the cumulative domestic investment condition defined for that year.

— D). Preference will be given to the eligible company or to the company or companies in its Group committing to withdraw their investment during the duration of the program. The proposed investment commitment will be valued by calculating the net present value (NPV) of the investment using the discount rate as a discount factor.

~ Table –II

Incentive slabs for Champion OEM and New Non-Automotive (OEM)

Investment company