New SOPs under PLI Auto scheme will boost Indian economy: Union Minister Mahendra Nath Pandey

New Delhi [India], April 27 : Ministry of Heavy Industries on Thursday announced the release of standard operating procedures (SOPs) under the Production Linked Incentive (PLI) Auto scheme to testing agencies which aims to promote local manufacturing and reduce dependence on imports, thereby boosting the Indian economy, the government in a release said.

"With this, the applicants under the scheme can now submit their applications for the testing and certification of AAT products (both OEMs and components), which will help them qualify for incentives under the PLI Auto scheme," the press release said.

In this regard, the Union Heavy Industries Minister Mahendra Nath Pandey said, "The ministry is trying to align itself with the Prime Minister's vision of Aatmrbhar Bharat, and these SOPs will not only help to achieve that but will also help to increase the manufacturing foothold".

"It will boost the domestic manufacturing sector and reduce dependence on imports, thereby creating more job opportunities for Indians. The government is committed to promoting skill development and entrepreneurship in the country, and this initiative will help in achieving that goal. It would contribute to the overall economic growth of the nation. The scheme is expected to attract significant investments and help India become a global hub for automobile manufacturing," he added.

"The Ministry of Heavy Industries notified the Production Linked Incentive (PLI) Scheme for Automobile and Auto Component Industry in India (PLI-AUTO Scheme or the Scheme) on September 23, 2021, with a budgetary outlay of 25,938 crores. The PLI-Auto Scheme proposes financial incentives to boost domestic manufacturing of advanced automotive technology (AAT) products and attract investments in the automotive manufacturing value chain," the press release mentioned.

Earlier the Ministry of Heavy Industries constituted a committee to make SOP for the scheme.

"A committee headed by Director ARAI Pune was constituted with members comprising all testing agencies, viz., iCAT Manesar, NATRAX, Pune, GARC Chennai, and IFCI (PMA for PLI Auto Scheme), to make an SOP for calculating DVA, or domestic value addition. Accordingly, with this sharing of knowledge and views among the various stakeholders, the committee drafted the SOP after deliberating on all the suggestions received from the stakeholders. Consultations were held with all 85 applicants for the PLI scheme. These include 18 OEMs and 67 auto component manufacturing compes. The list of these compes is attached," it mentioned.

"Through stakeholders' consultations and continuous discussions, the industry shared various representations and suggestions. Further, the draft SOP was also shared with the stakeholders, including applicant compes, from time to time for their input and feedback. Further, the Committee also carried out a trial DVA calculation exercise with some of the OEM and component applicants on a selective basis," it added.

The government in its notification mentioned that the objectives of the PLI Scheme include overcoming cost disabilities, creating economies of scale, and building a robust supply chain in areas of advanced automotive technology products.

"A direct supplier to an OEM is called a "tier 1 supplier. Tier 1 suppliers are known as Tier 2 suppliers, and so on. The information with regard to imports up to the Tier 3 level has to be authenticated by the applicants up to the Tier 1 level only. However, no documents up to Tier 3 will be required to be submitted at the time of filing the application. The declarations submitted by the applicants will be adequate for most of the requirements under the scheme," the press release said.

"In case there are unforeseen circumstances preventing compliance with all provisions contained in the SOP, the testing agencies have been given the power to relax the provisions of the SOP. This will enable a flexible approach to the resolution of issues that may arise in the complex supply chain of the automotive industry. According to the scheme guidelines, applicants must achieve a DVA of 50% to claim incentives under the scheme. The auto compes and component makers are required to calculate and present the DVA across their supply chain and present these details to the testing agencies. This is being done to promote the Make in India campaign and boost domestic manufacturing of advanced automotive products," it mentioned.