The Rs 25,938-crore production-linked incentive scheme is aimed at promoting domestic manufacturing of advanced automotive technology products and attracting investments in the automotive manufacturing value chain.
The government announced today that it will amend the production-linked subsidy system for automobiles and auto parts and extend the duration of the system by one year until March 31, 2028.
The Rs 25,938-crore production-linked incentive scheme is aimed at promoting domestic manufacturing of advanced automotive technology products and attracting investments in the automotive manufacturing value chain. Initially, this incentive was applied to the final sales amount for a total of five consecutive financial years from fiscal year 2022-2023 to fiscal year 2026-2027.
According to the revised scheme, the incentives will be applicable for a total of five consecutive financial years, 2023-2024 and 2027-2028. Incentive payments will begin in fiscal year 2024-2025.
This scheme has two components. The Champion OEM Incentive Scheme for battery electric vehicles and hydrogen fuel cell vehicles and the Component Champion Incentive Scheme for high-tech and high-value components. This incentive is given for the production of products with at least 50% domestic value addition.
The government has approved 18 companies including Maruti Suzuki, Tata Motors, Hero MotoCorp, Bajaj Auto and Ola Electric under the champion OEM category of the scheme and 67 companies under the component champion category.
The proposed amendments also note that if an approved company fails to meet the prescribed sales growth criteria over the first year’s criteria, it will not receive any incentives for that year. “However, businesses will be eligible to receive benefits in the following year if they meet the criteria, which is calculated based on a 10% year-on-year growth above the first year’s criteria,” the Ministry of Heavy Industry said.