Government Sets Norms for Auto Components Certification Under PLI Program  

OEMs can also get their products under the program


The Ministry of Heavy Industries (MHI) has released standard operating procedures (SOPs) under the Production Linked Incentive (PLI) program for automotive companies and component manufacturers to get their products tested and certified.

The program proposes financial incentives to boost domestic manufacturing of AAT products and attract investments in the automotive manufacturing value chain. It has two parts— Champion OEM, which will make electric or hydrogen-powered vehicles, and Component Champions, which will make high-value and high-tech components.

Under the SOPs, companies and parts manufacturers can submit applications for the testing and certification of advanced automotive technology (AAT) components. Original equipment manufacturers can also submit their applications.

The PLI program for automobiles and auto components will provide financial incentives to boost domestic manufacturing of AAT products in the country. The program is aimed at attracting investments in the automotive manufacturing value chain.

The government through the PLI program for automobiles aims to resolve cost disabilities and economically scale the sector while strengthening the supply chain for components to be manufactured using advanced automotive technology.

Applicants must achieve 50% domestic value addition (DVA) to claim incentives under the program. Auto companies and component manufacturers must calculate and present the DVA across their supply chain and submit the details to the respective testing agencies.

MHI notified the PLI program for automobile and auto components in September 2021.  The PLI program aims to encourage the industry to make fresh investments to make advanced auto products.

According to Union Minister of Heavy Industries Mahendra Nath Pandey, “The Ministry is trying to align itself with the Prime Minister’s vision of Aatmanirbhar Bharat, and these SOPs will not only help to achieve that but will also help to increase the manufacturing foothold. With this, the ministry aims to boost the domestic manufacturing sector and reduce dependence on imports, thereby creating more job opportunities for Indians. The program is expected to attract significant investments and help India become a global hub for automobile manufacturing.”

Last year, the ministry notified that the program has attracted a proposed investment of ₹748.5 billion (~$9.82 billion). Over five years, the target investment estimate was ₹425 billion (~$5.57 billion). The proposed investment of ₹450.16 billion (~$5.90 billion) was from approved applicants under the Champion OEM Incentive program and ₹298.34 billion (~$3.91 billion) from approved applicants under the Component Champion Incentive program.