Preferential measures linked to production in the field of automobiles and related parts

In November, India's Ministry of Heavy Industry began accepting applications for production-linked incentives (PLI) for automobiles and auto parts. The government has budgeted a total of 259.38 billion rupees (approximately 389.07 billion yen, 1 rupee = approximately 1.5 yen) for the next five years as subsidies for PLI in this field (September 24, 2021). See article), applications from companies including foreign companies will be accepted on the dedicated website until January 9, 2022.

In the automobile and parts field, the two products covered by this PLI in finished vehicles (including motorcycles and tricycles) are electric vehicles (EV) and fuel cell vehicles (FCV). If a finished car manufacturer applies, annual sales worldwide in fiscal 2020 (April 2020 to March 2021) must be 100 billion rupees or more, and fixed asset value (acquisition price) must be 30 billion rupees or more. There are two minimum requirements: The plan over the next five years calls for a step-by-step investment of 10 billion rupees for motorcycles and three-wheelers and 20 billion rupees for other vehicles.

The products covered by this PLI in automobile parts are defined as those using advanced technology, and are not limited to parts for electric vehicles and fuel cell vehicles. This includes a wide range of parts, including advanced driver assistance systems (ADAS), electronic control units (ECU), and sensors (Note). There are two minimum requirements for parts manufacturers to apply: annual global sales in FY2020 of 5 billion rupees or more and fixed asset value (acquisition price) of 1.5 billion rupees or more. A plan to invest a total of Rs 2.5 billion in phases over the next five years is required.

If the application is approved, the company can receive a certain percentage of the increase in sales of the target product manufactured in Japan (base year: FY2019) as a subsidy for the five years from FY2022 to FY2027. . For finished vehicles, this percentage is set at 13-16% depending on annual sales, with an additional 2% if cumulative sales reach INR 100 billion over five years. For auto parts, the percentage will be 8-11%, with an additional 2% if cumulative sales reach INR 12.5 billion over five years. In the case of parts for electric vehicles and fuel cell vehicles, an additional 5% is added.

The Indian government is actively promoting the domestic manufacturing industry under the slogan "Make in India" (refer to the regional analysis report dated April 22, 2021), and the PLI introduced in 2020 is its flagship policy (see article on May 21, 2020). At present, in each of the 13 fields covered by the system, the relevant ministries and agencies are inviting applicants one by one after setting the target products, examination criteria, application period, etc. for each field.

(Note) The list of applicable products is published in the list (pages 42-48) in Attachment 2 of the application by the Ministry of Heavy Industry. Inquiries from Japanese companies are handled by Japan Plus (a Japanese expatriate) of Invest India, an Indian investment promotion agency.

(Taku Hiroki)