Many companies fail to make required investments under auto PLI plan

economictimes.indiatimes.com:

The Rs 25,938-crore scheme, which looks to boost local manufacturing of advanced automotive technology (AAT) products, comes with a rider of stipulated fresh local investments for companies to receive incentives. However, many companies skipped on making these investments owing to some uncertainties around the scheme, sources said. One of the key reasons was a delay in the release of a standard operating procedure (SOP) to calculate domestic value addition (DVA). The scheme requires a minimum 50% domestic value addition (DVA) by manufacturers. However, the SOP for calculating the DVA was released only on April 27, 2023. The scheme became operational from April 2022.

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In the absence of the SOP, companies claim that they couldn’t receive certification of compliance in time for the first year of the scheme. “Because scheme details like the SOP were not released, lenders did not release the funds as they were waiting for reasonable certainty that we would get the benefits which would allow us to pass them on to customers,” said Sudhir Mehta, managing director of Pinnacle Industries, one of the scheme participants. “Now that clarity has come, we are planning to make the investment this year,” Mehta said. Queries sent to the ministry of heavy industries, which is implementing the PLI scheme for the auto sector, went unanswered as of press time. As many as 95 companies were shortlisted for the PLI scheme for the auto industry. Of these, 20 companies were under the original equipment manufacturer (OEM) category, including Maruti Suzuki and Tata Motors, and 75 companies under the component maker category, including Bosch and Lucas TVS. A few companies,