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MINISTRY OF HEAVY INDUSTRIES

NOTIFICATION

New Delhi, the 23rd September, 2021

SUBJECT: GUIDELINES FOR THE PRODUCTION LINKED INCENTIVE (PLI) SCHEME FOR AUTOMOBILE AND AUTO COMPONENT INDUSTRY

S.O. 3947(E).—1. Background

1.1 The Production Linked Incentive (PLI) scheme for Automobile and Auto components (herein after referred to as “Scheme”) has been notified vide notification S.O. No. 3946(E) dated 23.09.2021.

1.2 In pursuance of Para – 7 of said notification and for the effective operation and smooth implementation of the Scheme, the following guidelines are being laid down that are to be read along with the scheme. In case of any inconsistency between the scheme and the guidelines, the provisions of the scheme shall prevail.

1.3 The automotive industry is a major economic contributor in India. The sector is responsible for ~ 35% of India’s manufacturing GDP and has been a key growth driver for the economy. Today, many component makers are Tier 1 suppliers to global auto OEMs and several India-manufactured motor vehicles make their way to international markets. This demonstrates that the Indian automotive sector has been an adopter of global technological changes and other global standards.

1.4 The Production Linked Incentive (PLI) Scheme for Automobile and Auto components proposes financial incentives to boost domestic manufacturing of Advanced Automotive Technology products and attract investments in the automotive manufacturing value chain. Its prime objectives include overcoming cost disabilities, creating economies of scale and building a robust supply chain in areas of Advanced Automotive Technology products. It will also generate employment. This scheme will facilitate the Automobile Industry to move up the value chain into higher value added products.

1.5 These guidelines are being issued for effective and smooth implementation of the Scheme. These guidelines cover, inter alia, the following:

  • Definitions
  • Tenure
  • Eligibility
  • Application and Online Portal
  • Project Management Agency (PMA) and Empowered Committee (EC)
  • Approval under the Scheme
  • Calculation and disbursement of incentive

2. Definitions

2.1. Applicant: An applicant for the purpose of the Scheme should be a company or its Group Company(ies) incorporated under The Companies Act in India, engaged in automotive and/or auto component manufacturing sector or New Non-Automotive Investor company or its Group Company(ies) (who are currently not in automobile or auto component manufacturing business) meeting the eligibility criteria specified under the scheme and making an application for seeking approval under the Scheme.

2.2. Application: Application submitted by an applicant to the Ministry of Heavy Industries (MHI) as per the Application Form prescribed under these guidelines containing requisite information, along with supporting documents and application fee. The Application Form shall be notified separately in due course of time.

2.3. Application Approval Date: The date on which approval letter under the Scheme is issued by the MHI.

2.4. Application Window: Applications will be invited within 60 days of notification of this scheme. The window for receiving applications through the Notice Inviting Applications will be for a period of 60 days.

2.5 Approved Applicant/Company: The eligible company or its Group company(ies) who has been approved by MHI under the Scheme.

2.6. Automotive OEM: The original manufacturer of a vehicle, including tractor and automobile meant for military use and/or vehicle aggregates.

2.7. Base Year: Financial Year 2019-20 for calculation of eligible sales value (not applicable for New Non-Automotive investors).

2.8. Completely Built-in Unit (CBU): This is a vehicle that is in a completely assembled form.

2.9. Completely Knocked Down (CKD): A vehicle as a Completely Knocked Down(CKD) kit containing all the necessary parts for assembling a complete vehicle with chasis, engine, gearbox, transmission mechanism not in a pre-assembled condition.

2.10. Eligible Product:

i. Pre-approved Advanced Automotive Technology Vehicles and pre-approved Advanced Automotive Technology 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.

ii. The list of Advanced Automotive Technology Vehicles and Advanced Automotive Technology Components will be prescribed and can be amended by MHI from time to time depending upon technological developments.

2.11. Eligible Sales Value and Determined Sales Value under the Scheme:

I. Eligible Sales Value for Vehicle Segment: Total sales (Net of GST) for eligible vehicles.

II. Eligible Sales Value for Component Segment: Total sales (Net of GST) for eligible components Or apportioned value of eligible component as determined by Testing Agency of MHI.

III. Determined Sales Value for Vehicle Segment: (Eligible Sales Value for Vehicle Segment for a particular year) minus (Eligible Sales Value for Vehicle Segment for Base year).

IV. Determined Sales Value for Component Segment 🙁 Eligible Sales Value for Component Segment for a particular year) minus (Eligible Sales Value for Component Segment for Base year).

2.12 Empowered Group of Secretaries (EGoS): As approved by the Cabinet on 11th November 2020, the Empowered Group of Secretaries (EGoS) chaired by Cabinet Secretary (constituted by the Cabinet vide Gazette notification dated 10.06.2020) will monitor the PLI scheme, undertake periodic review of the outgo under the scheme, ensure uniformity of all PLI Schemes and take appropriate action to ensure that the expenditure is within the prescribed outlay. In addition, any changes required in the modalities of the scheme mentioned in the Draft Cabinet Note, subject to the condition that the overall financial outlay remains within ₹ 25,938crore, will be placed for consideration of EGoS.

2.13 Financial Year: Financial Year begins on the 1st April of a year and ends on 31stMarch of the following year.

2.14 Fixed Assets: Fixed asset is an asset held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business e.g., Property, plant and equipment etc.

2.15 Force Majeure: Extraordinary events or circumstances beyond human control, such as event described as an act of God (like a natural calamity) or events such as a war, strike, public health emergency, riots, crimes (but not including negligence or wrong-doing, predictable/ seasonal rain and any other events specifically excluded).

2.16 Global Group Revenue: Total revenue of the group companies from global operations (from automotive and auto component manufacturing in a given year).

2.17 Group Companies2: Group Company(ies) shall mean two or more enterprises which, directly or indirectly, are in a position to:

Exercise twenty-six percent or more of Voting rights in the other enterprise;

Or

Appoint more than fifty percent of members of Board of Directors in the other enterprise (As defined in the FDI Policy Circular of 2020).

2.18 Global Net Worth: It refers to the Gross Net worth of a company or its Group company(ies) from all operations i.e. Domestic as well as Foreign, of all assets (Domestic plus Foreign) less all liabilities (Domestic plus Foreign).

2.19 Investment- “Investment” as mentioned in Para -3.2(c) of the scheme shall mean:

2.19.1 Expenditure incurred on Plant, Machinery, Equipment and Associated Utilities: This shall include expenditure on plant, machinery, equipment and associated utilities as well as tools, dies, moulds, jigs, fixtures (including parts, accessories, components and spares thereof) of the same, used in the design, manufacturing, assembly, testing, packaging or processing of any of the eligible products under the scheme. It shall also include expenditure on packaging, freight/transport, insurance, and erection and commissioning of the plant, machinery, equipment, and associated utilities. Associated utilities would include captive power and effluent treatment plants, essential equipments required in operations area such as clean rooms, air curtains, temperature and air quality control systems, compressed air, water and power supply, and control systems. Associated utilities would also include IT and ITES infrastructure related to manufacturing including servers, softwares, and ERP solutions. All non-creditable taxes and duties would also be included in such expenditure.

2.19.2 Expenditure incurred on Land and Building: The 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% of Minimum Cumulative Domestic Investment defined for a segment.

2.20 Incentive: Incentive is the financial benefit to be provided to the selected applicants.

2.21 Manufacturing: In accordance with Central Goods and Services Tax (CGST) Act,2017, manufacturing shall mean processing of raw material or inputs in any manner that results in 2 FDI policy circular, 2020 emergence of a new product having a distinct name, character and use and the term “manufacturer” shall be construed accordingly.

2.22 Net Sales: Net sales are the sum of a company’s gross sales minus its returns, allowances, and discounts.

2.23 New Non-Automotive Investor company or its Group company(ies): New Non-Automotive Investor company or its Group company(ies) will be defined as those who have no revenue from manufacturing of Automobile or auto components as on 31.03.2021.

2.24 Project Management Agency (PMA): Refers to the financial institution(s) or any other authority(ies) appointed by MHI to act on its behalf for receipt and appraisal of applications, verification of eligibility and examination of disbursement claims through any method / document deemed appropriate and for managing the above-mentioned in accordance with these guidelines.

2.25 Semi-Knocked down Unit (SKD): Semi-Knocked Down (SKD) is a vehicle as a knocked down kit containing all the necessary parts, sub-assemblies for assembling a complete vehicle with engine, gearbox, transmission in pre-assembled condition but not mounted on a chassis or a body assembly.

2.26 Value Addition: The term “Value addition” will be construed as the percentage of manufacturing activity being undertaken in that referred part of the supply chain. % domestic value addition= [(Ex-factory price of the product (net of GST) – (minus) Import content i.e. sum of FOB value of all imported components or materials in the final product including import duties) / Ex-factory price of the product (net of GST)] x 100.It will be certified by Testing agency of MHI.

2.27 Vehicle Aggregates: Vehicle aggregate is a sub-assembly / combination of different components for a defined vehicle model that are combined to provide a specific functionality to the vehicle. Aggregates of a vehicle typically include body shell / chassis, engine, transmission, suspension, steering systems, wheel assemblies, brake systems, seats etc.

3. Tenure of the Scheme: Incentive under the scheme will be applicable, starting from the Financial Year 2022-23 which will be disbursed in the following Financial Year i.e. 2023-24 and so on for a total of five (05) consecutive Financial Years.

4. Eligibility

4.1. Eligibility: The applicant company or its Group company(ies) will need to meet the following common criteria to qualify and receive benefits under the Scheme:

Basic Eligibility Criteria:

(a) For company or its Group company(ies) with existing presence in India or globally in the Automotive vehicle and components manufacturing business:

Eligibility Criteria Auto OEM Auto-Component
Global   group*   Revenue

(from automotive and/or

auto                component
manufacturing)

Minimum ₹ 10,000 crore. Minimum ₹ 500 crore.
Investment Global Investment of Company or its Group* Company(ies) in fixed assets (gross block) of ₹ 3,000 crore. Global Investment of Company or
its Group* Company(ies) in fixed
assets (gross block) of ₹150 crore.

*Group Company(ies) shall mean two or more enterprises which, directly or indirectly, are in a position to:

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

Or

Appoint more than fifty percent of members of Board of Directors in the other enterprise (As defined in the FDI Policy Circular of 2020).

Note: i. Above Eligibility criteria to be met based on audited financial statements for year ending March 31, 2021.

ii. An applicant company or its Group company(ies) must satisfy the entire eligibility criteria to be eligible under the scheme.

(b) For new non-automotive investor company or its Group company(ies) that may want to participate in this scheme:

Eligibility Criteria New Non-Automotive investor company or its Group company(ies) (who are currently not in automobile or auto component manufacturing business)
Global net worth ₹ 1000crorebased on audited financial statements for year ending March 31, 2021.
Committed

investment in India

over    five     year
period

As per Minimum New Domestic Investment Conditions mentioned in para – 4.1(c) below.

Note :

i. Non-Automotive company or its Group company(ies) can qualify for this scheme provided they present a clear business plan to invest in India and generate revenues from Advanced Automotive Technology vehicles or Advanced Automotive Technology components manufacturing.

ii. The applicant new Non-Automotive Investor company or its Group company(ies) will be eligible to claim incentive subject to meeting cumulative minimum new domestic investment to be achieved for a particular year. The applicant will also have to meet the % Year on Year growth criteria from the minimum threshold fixed from the first year.

iii. New Non-Automotive Investor company or its Group company(ies) will be defined as those who have no revenue from manufacturing of Automobile or automobile components as on 31st March 2021.

iv. An applicant new Non-Automotive Investor company or its Group company(ies) must satisfy the entire eligibility criteria.

(c) Minimum New Domestic Investment Conditions:

Cumulative New Domestic Investment Condition of Performance (₹.Crore)

Cumulative              new domestic investment to be achieved Cham-pion OEM (Except 2W         & 3W) Cham-pion OEM 2W & 3W Compo-nent Champ-ion New Non-Automotive investor(OEM) company or its Group New Non-Automotive investor (Comp-onent) company or  its          Group company (ies)
Upto or  before 300 150 40 300 80
March 31, 2023
Upto or  before 800 400 100 800 200
March 31, 2024
Upto or  before 1400 700 175 1400 350
March 31, 2025
Upto     or    before

March 31, 2026

1750 875 220 1750 440
Upto     or    before

March 31, 2027

2000 1000 250 2000 500

Note :

i. New investments should be made from the same legal entity as the one applying for the incentive.

ii. Cumulative new domestic investment made starting 1st April 2021 shall be considered under this condition.

iii. The approved Company is required to meet the cumulative investment condition for each year.

iv. In the event, any approved company meets the investment condition few years before the end of the scheme; it will be eligible for incentives throughout the tenure of the scheme subject to meeting other conditions of the scheme.

v. In case the approved company fails to meet the cumulative domestic investment condition in any given year, it will not receive any incentive for that year even if the threshold for Determined sales value is achieved. However, it will still be eligible to receive the benefits under the scheme in the following years if it meets the cumulative domestic investment condition defined for that year.

(d) Preference will be given to eligible company or its Group company(ies) committing to front load their investment during the scheme period. Proposed investment commitment will be evaluated by calculating the Net Present Value (NPV) of the investment using the bank rate as the discounting factor.

4.2. Eligibility for incentive

4.2.1 Approved Applicants would be eligible for incentives subject to meeting specific criteria under the scheme, as prescribed.

4.2.2 Minimum 50% domestic value addition will be required. Phased Manufacturing Programme similar to FAME-II Scheme will be followed. Methodology of determination of domestic value addition will be same as in FAME scheme. Testing Agency of MHI will certify domestic value addition in the eligible product.

4.2.3 Pre-approved eligible product with minimum 50% domestic value addition will be eligible for incentive under this scheme.

4.2.4 The scheme is designed to incentivize Advanced Automotive Technology products only viz eligible Advanced Automotive product on standalone basis at component level or in integration with the vehicle having appropriate value apportionment on the vehicle side. Therefore, an approved legal entity as Automotive OEM company or New Non-Automotive Investor company can avail incentives under both components of the scheme subject to the condition that any eligible product shall be incentivized only once under the scheme.Any double claim of incentive for the same product under component level and vehicle level can lead to disqualification of the legal entity/entities involved on this ground alone in addition to any other legal action as applicable under the law.

4.2.5 Champion OEM Incentive Scheme

4.2.5.1 Automotive OEM company or its Group company(ies) and new Non-Automotive investor company or its Group company(ies) are eligible to apply for the scheme.

4.2.5.2 Incentives are applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments – 2 wheelers, 3 wheelers, passenger vehicles, commercial vehicles, Tractors and automobile meant for Military use and any other Advanced Automotive Technology vehicle prescribed by MHI depending upon technical developments.

4.2.6. Component Champion Incentive Scheme

4.2.6.1 Automotive OEM company or its Group company(ies), Auto-component manufacturing company or its Group company(ies) and new Non-Automotive Investor company or its Group company(ies) are eligible to apply for the scheme.

4.2.6.2 Incentives are applicable on pre-approved Advanced Automotive Technology 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 and any other Advanced Automotive Technology component prescribed by MHI depending upon technical developments.

5. Application

5.1. The window for receiving applications through the Notice Inviting Applications will be for a period of 60 days.

The applicant companies are required to submit an application along with financial & supporting documents.

Note: Documents required for verifying eligibility for both the components of the scheme will include, but not be limited, to the following:

  • Audited financial statements (Profit & loss, balance sheet) of the legal entity applying for the scheme as well as that of the global group company.
  • For base lining and establishing incentives, eligible sales value in the base year and domestic investment made starting from 01.04.2021, if any, the applicant needs to furnish a statutory auditor’s certificate.
  • The documents should be audited and validated by a statutory auditor.

5.2 The Application Form: The Application Form along with details of all necessary supporting documents, to be submitted at the time of application, will be notified separately by Ministry of Heavy Industries (MHI) in due course of time.

5.3 A non-refundable application fee would be payable for each application.

6. Online Portal

6.1. All applications will be submitted through an online portal maintained by the PMA. In case the portal is not available, applications may be submitted in physical form to the PMA.

6.2. Upon successful submission of an application, PMA will issue a unique Application ID to the applicant for all future references pertaining to the Scheme.

6.3. URL of the online portal will be made available on the website of the MHI, in due course.

6.4 The scheme will be data driven to ensure transparency, automaticity and prompt disbursement of incentives. The data will be captured in seamless manner and will make use of respective HS codes.

6.5 Provision for Online Application, Monitoring and Review for Approval of Advanced Automotive Technology product:

6.5.1 There will be provision in the Online Portal for making online application by the applicants for approval of their Advanced Automotive Technology product by the Testing Agency of MHI as per the list of Advanced Automotive Technology product prescribed by MHI from time to time.

6.5.2 Testing Agency will take final decision on the application for Approval of Advanced Automotive Technology product within 90 days.

6.5.3 Monthly review will be done at Secretary, MHI level for monitoring of timely disposal of the applications.

6.6 The disbursement mechanism will incorporate pre-approval of Advanced Automotive Technology vehicles & Advanced Automotive Technology components by MHI through its agencies as is being done under Phased Manufacturing Programme (PMP) in FAME-II scheme. Subsequently, there would be drop-down menu for submission of data for claims in the data driven system.

6.7 Pre-approval of Advanced Automotive Technology vehicles & Advanced Automotive Technology components will be done by Testing Agencies of MHI. Pre-approval will be done within 90 days from the date of application by the applicant.

6.8 MHI may separately issue detailed instructions for the use of online portal for the PLI scheme.

7. Project Management Agency (PMA)

7.1. The Scheme will be implemented through a Project Management Agency (PMA) which will be responsible for providing secretarial, managerial and implementation support and carrying out other responsibilities as assigned by MHI from time to time. Further, PMA will report to JS, MHI through the appropriate channel and will be under the overall control of AS&FA, MHI and will put up their all findings/observations/recommendations to the Administrative Mechanism created under FAME-II scheme in MHI.

7.2. The PMA shall be responsible, inter alia, for:

7.2.1. Receipt of applications, examination and processing of applications and issuing acknowledgements.

7.2.2. Submission of a fortnightly statement to MHI about the status of applications received and processed under the Scheme.

7.2.3. Making appropriate recommendations through appropriate channel for approval of applications under the Scheme.

7.2.4. Verification of thresholds for determining eligibility for disbursement incentive.

7.2.5. Examination of claims for disbursement of incentive and making appropriate recommendations through appropriate channel.

7.2.6. Verification of the reconciliation of disbursement claims with prescribed documents.

7.2.7. Compilation of data regarding progress and performance of the Scheme through Quarterly Review Reports and other information /documents, as required and approved by the competent authority.

7.2.8. Providing secretarial and other support to MHI for carrying out its responsibilities.

7.2.9 Keep a check on any diversion arising out of any change in accounting policy or duplication of benefits on account of same activity under different schemes.

7.3. The PMA may request for additional information, details and documents from the applicant as deemed necessary.

0. Approval under the Scheme

8.1. The PMA will process the applications and make appropriate recommendations for approvals under the Scheme.

8.2. MHI will consider applications, as recommended by PMA through appropriate channel, for approval under the Scheme.

8.3 To avoid any duplication and formation of multiple committees, the Administrative Mechanism created under FAME-II scheme in MHI will be used for granting approvals under Production Linked Incentive (PLI) Scheme for Automobile and Auto components.

8.4. All the applications will be finalized within 60 days from the date of submission of applications or receipt of clarification sought, if any.

8.5. After receiving approval, the PMA will arrange to issue a letter to the selected applicant within 5 working days, communicating approval under the Scheme.

8.6. If a selected applicant is found to be ineligible at any stage, or if it has not complied with notifications, orders, guidelines etc. of the Scheme, the envisaged incentive claim of such selected applicant shall be forfeited or recovered with interest, if already paid.

9. Post Approval: PMA shall monitor the progress of the applicants.

10. Calculation of Incentive

10.1 In order to receive the incentives, the approved companies need to upload their annual claims under the scheme, along with audited financial statements / supporting documents, as certified by a Chartered Accountant and any other document, as specified.

10.2. Annual payment to be initiated after review of claims and verification of meeting the criteria and thresholds.

10.3. The incentive applicable for the approved applicant shall be computed as follows: 10.3.1 Champion OEM incentive scheme

I. The approved applicants will be entitled to receive incentives (% benefit) on Determined Sales Value subject to meeting other conditions of the scheme.

II. For the approved New Non-Automotive Investor company (who is currently not in automobile or auto component manufacturing business) eligible sales value in the base year will be taken as zero.

. Threshold Determined Sales Value for the first year is₹125 crore in respect of all companies viz. existing Automotive and New Non-Automotive Investor companies under this component of the scheme to claim incentive.

III. Year on Year (YoY) growth of minimum 10% in Determined Sales Value of first year i.e ₹125 crore has to be achieved by all approved companies viz. existing Automotive and New Non-Automotive Investor companies, to become eligible to receive incentive.

IV. In case the approved company fails to meet the threshold for increase in Determined Sales Value over the threshold for the first year i.e ₹125 crore, for any given year, it will not receive any incentive for that year. However, it will still be eligible to receive the benefits under the scheme in the next year if it meets the threshold for that particular year calculated on the basis of 10% YoY growth over the threshold for the first year and thereafter for 4 consecutive years from when the incentive under the scheme becomes applicable (FY 2022-23). This provision will provide level playing field to all approved companies viz. existing Automotive and New Non-Automotive Investor companies as well as safeguard the approved applicants who preferred to front load their investment, against adversities of the market demand conditions in subsequent years of the scheme.

I. The approved Companies that achieve a target cumulative increase in Determined sales of ₹ 10,000crore across the duration of the scheme will receive an additional incentive of 2%. This additional 2% incentive is applicable on the cumulative increase in Determined Sales Value in excess of ₹ 10,000 crore.

V. Incentive proposed under this scheme to electric vehicle manufacturers will be independent of the incentives given under FAME II scheme where incentives are provided to customers who buy the vehicles and not to the manufacturers. Incentives can be claimed under this scheme for Battery Electric vehicles having Advanced Chemistry Cell (ACC) batteries for which incentives have been claimed under the PLI scheme for ACC.

VI. Incentive Slabs for Champion OEM and New Non-Automotive (OEM) Investor company:

Table 1: Incentive Slabs for Champion OEM and New Non-Automotive (OEM)

Investor Company

Determined Sales Value (in ₹ Crore) Incentives

(%age of Determined Sales Value)

<= 2,000 13%
> 2,000 to 3,000 14%
> 3,000 to 4,000 15%
> 4,000 16%
Cumulative Determined Sales Value of ₹10,000 Crores over 5 years Additional 2%

Note: – i. Only those Battery Electric Vehicles will be eligible for incentives which meet the performance criteria of FAME-II scheme or as notified from time to time by MHI.

10.3.2 Component Champion incentive scheme

I. The Approved applicants will be entitled to receive incentives (% benefit) on the Determined Sales Values of Advanced Automotive Technology components subject to meeting other conditions of the scheme.

II. For the approved New Non-Automotive Investor company (who is currently not in automobile or auto component manufacturing business) eligible sales value in the base year will be taken as zero.

II. Threshold Determined Sales Value for the first year is₹ 25 crore in respect of all companies viz. existing Automotive and New Non-Automotive Investor companies under this component of the scheme to claim incentive.

III. Year on Year (YoY) growth of minimum 10% in Determined Sales Value of the first year i.e. ₹ 25 crore has to be achieved by all approved companies viz. existing Automotive and New Non-Automotive Investor companies on ₹25 crore, to become eligible to receive incentive.

IV. In case the approved company fails to meet the threshold for increase in Determined Sales Value over the threshold for the first year i.e ₹ 25 crore, for any given year, it will not receive any incentive for that year. However, it will still be eligible to receive the benefits under the scheme in the next year if it meets the threshold for that particular year calculated on the basis of 10% YoY growth over the threshold for the first year and thereafter for 4 consecutive years from when the incentive under the scheme becomes applicable (FY 2022-23). This provision will provide level playing field to all approved companies viz. existing Automotive and New Non-Automotive Investor companies as well as safeguard the approved applicants who preferred to front load their investment, against adversities of the market demand conditions in subsequent years of the scheme.

V. The approved Companies that achieve a target cumulative increase in Determined Sales Value of ₹ 1250 crore across the duration of the scheme will receive an additional 2% incentive. This 2% additional incentive is applicable on the cumulative increase in Determined Sales Value in excess of ₹ 1250 crore.

VI. Additional incentive has also been provided for components of Battery Electric Vehicles (BEV) and Hydrogen fuel cell vehicles in order to promote future technology vehicles.

VIII. Incentive slab for Component Champion Incentive Scheme:

Table 2 : Incentive slab for Component Champion and New Non-Automotive (Component)

Investor company

Determined Sales Value (in ₹ Crore) Incentives

(%age of Determined Sales Value)

<= 250 8%*
> 250 to 500 9%*
> 500 to 750 10%*
> 750 11%*
Cumulative Determined Sales Value of ₹1,250 Crore over 5 years. Additional 2%
Battery Electric vehicles & Hydrogen fuel cell vehicles components Additional 5%

Note: – i. On an annual basis, the approved component Champions will have to separately report break up of sales value of components specific to Battery-EV and Hydrogen fuel Cell vehicle produced in India as defined in the guidelines.

11. Disbursement of Incentives

11.1. For claiming incentive under the Scheme, the approved applicants will be required to submit claims for disbursement of incentive to the PMA. The approved applicant must ensure that the claims are complete in all respects and are accompanied by all the required documents, as per the format approved by the Ministry.

11.3 The approved applicant may submit a claim for disbursement of incentive only on an annual basis, that is, for the eligible sales made and domestic investment done in the period of April to March, of the said financial year.

11.4 Claim for disbursement of incentive shall be filed by the approved applicant within 6 (six) months from the end of the financial year to which the claim pertains.

11.5. The PMA will examine the disbursement claim as submitted by an approved applicant. The PMA will keep a check on any diversions arising out of any change in accounting policy or duplication of benefits on account of same activity under different Schemes. The PMA shall verify eligibility and assess incentive payable to an approved applicant based on the method laid down in these guidelines and arrange to issue the approval letter after necessary approvals, to the applicant accordingly.

11.6. The PMA will have the right to verify any document(s) in relation to the claim for incentive, including, but not limited to, statutory auditor certificates and returns furnished to various Ministries / Departments / Agencies. The PMA shall also have the right to examine the end realization and settlement / payments corresponding to sales and investment, respectively, by way of auditor’s certificate, bank statements etc. to the extent deemed necessary.

11.7. In case of any doubt with respect to determining eligibility and incentive amount due, or any other matter in discharge of its duties and responsibilities, the PMA may refer such matter to MHI for clarification.

11.8. The PMA shall process claims for disbursement of incentives within 60 days from the date of receipt of such claim (or receipt of clarification sought, if any) and make appropriate recommendations to the Joint Secretary, MHI through appropriate channel under the overall control of AS&FA, MHI.

11.9. MHI will consider and approve claims for disbursement of incentive, as examined and recommended by the PMA through appropriate channel.

11.10. The PMA shall arrange to disburse funds after completion of all pre-disbursal formalities by the applicant and approval from MHI.

11.11. The disbursement of incentives will be in the form of Direct Bank Transfer through PFMS or through any other mechanism of adjustment in the name of the applicant only.

11.12. The approved applicants shall be required to reconcile Domestic Investment and Determined Sale Value with documents as prescribed by the PMA, by 31st of December of the financial year subsequent to which the claim pertains.

11.13. The PMA shall verify the aforesaid reconciliation. In case of excess claims disbursed, the approved applicant shall reimburse MHI for any incentive amount refundable, along with interest calculated at 3 years’ SBI Marginal cost of funds-based lending rate (MCLR) prevailing on the date of disbursement, compounded annually (for the period between excess payment and date of refund by the applicant).

11.14. If the PMA or MHI is satisfied that eligibility under the Scheme and / or disbursement of incentives have been obtained by misrepresentation of facts or falsification of information, MHI will ask the approved applicant to refund the incentives, along with interest calculated at 3 years SBI Marginal cost of funds-based lending rate (MCLR) prevailing on date of disbursement, compounded annually, after giving an opportunity to the applicant of being heard. This is without prejudice to any other action that may be taken under law.

11.15. MHI shall make budgetary provisions for disbursal of incentives under the Scheme. The PMA will submit budgetary requirements to MHI as a consolidated amount on quarterly basis.

11.16. The PMA shall furnish information to MHI with details of disbursement claims received for incentives, amount disbursed, reasons for rejection and delay in disbursement of the incentives, on a quarterly basis.

12. Review

12.1. Periodic reviews will be undertaken by the EGoS with respect to progress and performance of the Scheme.

12.2. All approved applicants shall be required to furnish self-certified Review Reports on a yearly basis. 12.3. The guidelines can be reviewed and revised by the competent authority, if required.

13. Residual

13.1. Approved applicant shall intimate the PMA of any change in the shareholding pattern during the tenure of the Scheme, after updation with the Registrar of Companies(RoC).

13.2. Any change in the shareholding pattern of an approved applicant leading to a successor- in-interest during the tenure of the Scheme, shall be intimated by PMA for approval of MHI to consider for disbursal of incentives.

13.3. All transactions by the selected applicant with Related Parties will be subject to provisions of relevant statutes and Accounting Standards — 18 and corresponding Ind-AS, as amended from time to time. In case of any proceedings under any Act leading to adjustment of pricing in the transactions between related parties, effect shall be given in calculation of incentive and/or eligible threshold investment.

13.4. To obviate any malpractices in the financial matters where disbursements are made to industry by the Government, it has been decided to provide deterrence against corrupt practices for promotion of transparency and equity. Therefore, keeping in view the sensitivities involved in the process and taking cue from the instructions of the Central Vigilance Commission regarding addition of an Integrity Pact in the matter of procurement, it has been decided that Applicants shall furnish undertaking w.r.t. Integrity Compliance duly signed by its authorised signatory, as will be notified along with the Application Form.

13.5. The undertaking shall be provided by all applicants whose applications or claims are under consideration for approval or disbursement of incentives. The applications or claims of those applicants who do not submit the undertaking shall not be processed and considered. The undertaking for confirming the compliance of integrity will be provided by applicants after the submission of claims for disbursement of incentive and in any case before release of funds. The release of incentives shall be withheld until the above-mentioned undertaking is provided.

14. Guidelines for PLI Scheme for Drone and Drone components: Guidelines for the PLI scheme for Drone and Drone components shall be separately notified / published by Ministry of Civil Aviation (MoCA).

14. List of Advanced Automotive Technology products (Prescribed by MHI from time to time):

i. The list of Advance Automotive Technology Vehicles – The following vehicles are prescribed by Ministry of Heavy Industries (MHI) as Advance Automotive Technology Vehicles. The list can be amended by MHI from time to time depending upon technological developments.

Sr. No. Description
1 Battery Electric vehicles –All vehicle segments which meet the performance criteria of FAME-II scheme or as notified from time to time by MHI.
2 Hydrogen Fuel Cell Vehicle – All vehicle segments.

ii. The list of Advance Automotive Technology Components will be notified separately by MHI in due course of time.

[F. No. 12 (11)/2020-AEI (21370)]

AMIT MEHTA, Jt. Secy.

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