Pre-approved AAT vehicles, components eligible for PLI benefits

Team Udayavani, Sep 25, 2021, 9:54 AM IST

Credit: iStock Photo

New Delhi: Pre-approved advanced automotive technology (AAT) vehicles and components of all vehicles will be eligible to avail benefits under the Rs 25,938 crore production linked incentive scheme for the sector, according to a notification of the heavy industries ministry.

The government has issued notification regarding the production linked incentive (PLI) scheme for automobile and auto components of all vehicles, including automobiles meant for military use. An approved applicant will be eligible for benefits for five consecutive financial years.

Eligible products that can avail incentive are “pre-approved AAT vehicles and pre-approved AAT 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,” it said.

The scheme is open to existing automotive companies and new non-automotive investor firms (who are currently not in the automobile or auto component manufacturing business). It has two components – Champion OEM Incentive Scheme and Component Champion Incentive Scheme.

“Total incentive per entire Group company (ies) is capped at Rs 6,485 crore (25 per cent 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,” the notification said.

It said that incentive will be applicable on the determined sales value, which is defined as the incremental eligible sales of a particular year over the base year.

“For the Champion OEM incentive scheme, a threshold determined sales value for the first year is Rs 125 crore in respect of all companies…to claim incentives. Similarly, for the Component Champion incentive scheme, threshold-determined sales value for the first year is Rs 25 crore in respect of all companies,” according to the notification.

As per the guidelines, expenditure incurred on land “will not” be considered for meeting the threshold criteria of cumulative minimum domestic investment.

However, buildings of the main plant and utilities will be considered as part of the investment, provided it does not exceed 10 per cent of the domestic investment, it added.

In case, the company fails to meet the threshold for sales value in any given year, it will not receive any incentive for that year, the notification said.

However, it will still be eligible to receive the benefits under the scheme in the next year if it meets the threshold of sales defined for that year subject to meeting the condition of Minimum New Domestic Investment for the claim year.

“Additional incentive of 2 per cent will also be applicable to support high growth achievers,” it added.