An automaker must have a group-level revenue of at least ₹10,000 crore and have made a minimum investment of ₹3,000 crore in fixed assets to qualify under the recently announced ₹25,938-crore scheme to promote the manufacturing of battery and hydrogen fuel cell vehicles.
While appreciative of the scheme, electric vehicle (EV) makers say they would not qualify if the criteria remains the same for everyone. Most of the specialised EV makers are small and several such as Hero Electric, Ather Energy and Kinetic Green are startups.
At a closed-door meeting organised by the Society of Manufacturers of Electric Vehicles, multiple manufacturers said the criteria left them ineligible, people in the know told ET. The meeting was attended by more than 30 EV makers and component vendors.
The EV segment in India is tiny compared with the conventional vehicle industry. Specialised EV manufacturers make a fraction of the revenue and investments required for the PLI scheme.
However, established manufacturers of conventional vehicles, such as Bajaj Auto, TVS Motor, Tata Motors and Mahindra & Mahindra, easily meet both conditions. New entrants like Ola Electric would also be able to qualify. The cab aggregator’s unit that just started production will be classified as a new, non-automotive company at the group level.
‘Aimed at Fence-sitters’
For this, the qualification mark is a global net worth of ₹1,000 crore as on March 31, 2021.
The EV manufacturers’ body declined to comment.
The chief executive officer of a leading EV company, who is aware of the discussions in the industry, said the thresholds were too high.
The scheme is aimed at enticing “the fence-sitters,” or those who are undecided about entering the segment or are just entering it, the person said, asking not to be named as the discussions were private. “The entrepreneurs who have been working only on EVs so far would be at an unfair disadvantage,” the CEO added.
For component makers, the requirements are lower than those for vehicle manufacturers. They need to have a minimum group revenue of ₹500 crore and have made investments of ₹150 crore. While many companies in this space will qualify, some startups may not make the cut.
Incentives At Par
The industry body now plans to submit a representation to the government, seeking to lower the qualification thresholds for existing EV makers and give special leeway to startups, ET has learned.
“If our revenues are low, we will get lower incentives. But we shouldn’t be excluded from the scheme and be at a disadvantage,” said the chief executive cited earlier.
The PLI scheme is targeted at promoting the domestic manufacturing of advanced automotive technology vehicles. These have been defined as battery, electric and hydrogen fuel cell vehicles, as per a September 23 notification of the ministry of heavy industries.
Beyond the qualification criteria, companies that get the incentives will also have to make minimum domestic investments ranging between ₹250 crore and ₹2,000 crore over the next five years, according to their category. The incentives will then be available based on the incremental sales generated over the base year of fiscal 2020.
In a recent interaction with ET, the managing director of a company that makes electric scooters said his company was contemplating applying for the PLI scheme as a component vendor. The company would not apply as a manufacturer partly because of the high qualification threshold.
