In a move to tighten the incentive disbursal system under the government’s flagship incentive schemes for electric vehicles, the Heavy Industries Ministry is moving from a paper-based subsidy claims mechanism to a new digital platform that will track the value addition achieved by a vehicle manufacturer using domestically produced inputs from equipment manufacturers.
Under this new platform, starting October 1, an IT-enabled system based on Application Programming Interface or API, would be leveraged to ensure that data pertaining to the net value addition achieved during the manufacturing process would automatically be fed into the Ministry’s portal from the vehicle manufacturers’ enterprise resource planning (ERP) systems. This will enable traceability of equipment and inputs with their complete digital footprint. ERP is an application software that organisations use to manage business activities.
Currently, companies file this in the physical format to claim incentives under the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India (FAME) scheme and other flagship schemes such as the Productivity-Linked Incentive (PLI).
“This (digital system) will not just bring in transparency but also be the next level in ease of doing business and will save a lot of hassle for companies that have to file it in physical form as on date,” Arun Goel, Secretary, Ministry of Heavy Industries told The Indian Express.
This is significant since the government’s revenue intelligence agency had flagged a discrepancy in the process related to claims made by some two-wheeler manufacturers who allegedly violated localisation norms while availing of subsidies under the electric vehicle promotion scheme.
Migrating to a digital platform is meant to bring in transparency in data-sharing between companies seeking incentives and the government. This comes when some companies have been found to have allegedly claimed incentives despite not having achieved their respective target to manufacture electric vehicles in the country.
However, Government officials indicated that the plan to migrate to a digital platform has been in the works even before these discrepancies surfaced and this could be replicated in other PLI-linked sectors. Indeed, this has already been introduced for the FAME scheme.
Under the second phase of FAME, the government’s focus is on electrification of public transportation and shared transportation and a budgetary support of Rs 10,000 crore has been allocated for the scheme. Electric Vehicle companies are required to source a bulk of components locally to avail of incentives under the FAME-II scheme.
The heavy industries ministry also manages the Rs 25,938-crore PLI scheme for automobile and the auto component sector and made a similar portal for monitoring localisation content of products availing incentives under the scheme.
The PLI scheme for the automobile and auto component industry proposes financial incentives to boost domestic manufacturing of advanced automotive technology products and to attract investments in the automotive manufacturing value chain.
Its prime objectives include creating economies of scale and building a robust supply chain in areas of advanced products so that Indian manufacturers can move up the global value chain and benefit from the “China Plus One” strategy of multinational companies.