Auto firms challenge PLI's local value addition calculation
ECONOMY & POLICY

Auto firms challenge PLI's local value addition calculation

Automakers participating in the Rs 259.38 billion production-linked incentive (PLI) programme are encountering difficulties in the calculation of local value addition, impeding their acquisition of compliance certificates. The PLI scheme, active since April 2022, aims to stimulate domestic manufacturing of advanced automotive products, particularly electric vehicles (EVs). However, the current formula for calculating domestic value addition (DVA) relies on ex-factory vehicle prices rather than production costs, affecting companies that offer discounted vehicles below production expenses.

The DVA requirement mandates a minimum 50% domestic value addition for eligibility for scheme incentives. As EV manufacturers often sell vehicles at a loss to remain competitive and attract consumers, they argue that the ex-factory cost would better reflect local value addition. The Society of Indian Automotive Manufacturers (SIAM) has petitioned for an adjusted formula, citing that the ex-factory price-based calculation understates real local value added.

Furthermore, auto companies seek an exemption on the costs of imported components like rare-earth magnets and semiconductors, which are crucial for EV production but not yet manufactured in India. While such exemptions have been granted to component makers, OEMs contend that their absence hampers in-house manufacturing of essential parts. The call for a fairer DVA calculation and broader exemptions highlights the challenges and nuances in fostering local EV production through PLI.

Redefine the future of urban mobility! Join us at the Metro Rail Conference 2025 to explore groundbreaking ideas and insights. 👉 Register today!

Automakers participating in the Rs 259.38 billion production-linked incentive (PLI) programme are encountering difficulties in the calculation of local value addition, impeding their acquisition of compliance certificates. The PLI scheme, active since April 2022, aims to stimulate domestic manufacturing of advanced automotive products, particularly electric vehicles (EVs). However, the current formula for calculating domestic value addition (DVA) relies on ex-factory vehicle prices rather than production costs, affecting companies that offer discounted vehicles below production expenses. The DVA requirement mandates a minimum 50% domestic value addition for eligibility for scheme incentives. As EV manufacturers often sell vehicles at a loss to remain competitive and attract consumers, they argue that the ex-factory cost would better reflect local value addition. The Society of Indian Automotive Manufacturers (SIAM) has petitioned for an adjusted formula, citing that the ex-factory price-based calculation understates real local value added. Furthermore, auto companies seek an exemption on the costs of imported components like rare-earth magnets and semiconductors, which are crucial for EV production but not yet manufactured in India. While such exemptions have been granted to component makers, OEMs contend that their absence hampers in-house manufacturing of essential parts. The call for a fairer DVA calculation and broader exemptions highlights the challenges and nuances in fostering local EV production through PLI.

Next Story
Real Estate

Colliers India Transacts 207,000 sq ft office space at Embassy TechVillage

Embassy Office Parks REIT, India’s first listed REIT and the largest office REIT in Asia by area, announced that it has signed an Agreement to Lease (‘ATL’) with global cyber security company Rubrik at Embassy TechVillage in Bengaluru.Colliers, a leading global diversified professional services company, specialising in commercial real estate services, engineering consultancy and investment management facilitated the transaction for Rubrik.Located on Bengaluru’s Outer Ring Road, Embassy TechVillage is one of Embassy REIT’s flagship office parks which offers world-class office spaces, ..

Next Story
Infrastructure Urban

Ensemble Infrastructure India Appoints Suman Saha as Director of Design

Ensemble Infrastructure India Ltd, a leading workplace design and build fit-out company, has appointed Suman Saha as its new Director of Design. With 25 years of experience in the industry, Suman is recognized for his innovative approach and excellence in design leadership.Working closely with the CEO, Suman’s appointment will enhance the company’s design communication across multiple touchpoints, ensuring smooth collaboration between clients, designers, and execution teams for superior project outcomes. Under his guidance, Ensemble will focus on creating workspaces and design labs that em..

Next Story
Products

Ribbon Vanity by Küche7: Fluid Design Meets Everyday Elegance

Küche7, pioneers in luxury stainless steel kitchens, have unveiled the Ribbon Vanity, a graceful creation that transforms bathroom spaces with its soft, flowing design and understated sophistication. Inspired by the fluid form of a ribbon, this vanity combines smooth finishes, clean lines, and gentle curves, offering a timeless aesthetic that seamlessly complements diverse interior styles.Available in a refined blush pink hue, the Ribbon Vanity effortlessly merges functionality with elegance. With thoughtfully designed storage options, it ensures that bathroom essentials are neatly organised ..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000