Auto parts makers get closer to PLI payouts
Tata Motors, Mahindra & Mahindra and Ola Electric—have already cleared the eligibility criteria for the incentives for multiple products, the certifications for auto parts makers were significantly delayed given a complex process involving auditor certifications for domestic value addition (DVA) at the component makers’ tier-II and tier-III vendors. With the advanced auto parts makers receiving certification confirming they meet the stringent 50% DVA criteria laid down under the scheme, the decks have now been cleared for the government’s move to finally start disbursements under the scheme, which it has said will begin in fiscal year 2025.
However, multiple industry executives said that unless the government decides to settle PLI claims on a quarterly basis, companies that have only now received DVA certification are unlikely to be able to draw any incentives before FY26. Auto parts makers still have a long way to go before they can receive the actual incentives—which, according to the scheme, range from 13-18% of the incremental sales revenue of each EV part (and 8-13% for non-EV parts).
Claims for sales in a certain fiscal year, according to the scheme, will be disbursed the following fiscal. A Nomura analysis states that even with a conservative estimate of EV adoption in India, PLI claims by OEMs and components makers are likely to far exceed the government’s budgetary allocation for the scheme.
The government has allocated ₹604 crore under the scheme for disbursement in FY25 (for claims made for FY24) and ₹3,150 crore in FY26 (for claims made for FY25), out of the total five-year outlay of nearly ₹26,000 crore. “Our analysis indicates that even on a conservative estimate of EV penetration touching ~6% and 9% for
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