Government notifies PLI scheme for automobile, components manufacturers

Source: The Hindu Businessline, 24 September 2021

The government has notified the production linked incentive (PLI) scheme for automobile and auto components industry in India for enhancing the country’s manufacturing capabilities of advanced automotive products with a budgetary outlay of ₹25,938 crore.

The scheme consists of two components — incentivising incremental sales of automobile and auto components related to advanced automotive technology — The Ministry of Heavy Industries (MHI) said in a notification.

“Total incentive per entire group company(ies) is capped at ₹6,485crore (25 per cent of total incentives outlay under this scheme). The cap on incentive payable to the approved company or group of company(ies) as stated above would be incorporated as part of the agreement,” the notification said.

To retain flexibility in the implementation of the scheme, the scheme proposes fungibility of funds within and across the components of the scheme, it said.

Incentives to manufacturers
Incentive payable under this scheme to electric vehicle (EV) manufacturers will be independent of/in addition to the incentives given under FAME-II scheme where incentives are provided to customers who buy the vehicles and not to the manufacturers. Under this PLI scheme, incentives are being given to manufacturers not the consumers, the notification further said.

“Incentives may also be claimed under this scheme for vehicles having advanced chemistry cell (ACC) batteries for which incentives have been claimed under the PLI scheme because battery electric vehicle (BEV) manufacturers have the freedom to source ACC batteries from anywhere, and in case this incentive is not allowed, they may resort to imports of ACC batteries for cost cutting,” it said.

Project management agency
The scheme will be implemented through a nodal agency which will act as a project management agency (PMA) and be responsible for providing secretarial, managerial and implementation support and carrying out other responsibilities, as assigned by MHI from time to time.

To carry out activities related to the implementation of the scheme, PMA would inter-alia be responsible for appraisal of applications and verification of eligibility for support under the scheme, examination of claims eligible for disbursement of incentives under the scheme, and compilation of data regarding progress and performance of the scheme including cumulative domestic investment and incremental eligible sales of goods for companies.

It will also be responsible for keeping a check on diversions arising out of any change in accounting policy or duplication of benefits on account of same activity under different schemes. To; and to avoid duplication and formation of multiple committees, the administrative mechanism created under FAME-II scheme in MHI will be used to grant approvals under PLI scheme for automobile and auto components.

Cost audit
The scheme will also have a provision for cost audit by external auditor (cost or chartered accountant) appointed by MHI. Expenses will be met within the allocation of the scheme, the notification said.

Also see: FADA urges govt to set up task force to monitor compensation plan for Ford dealers

The scheme begins in FY23, the incentives for which will be disbursed in the following year (FY24) and so on for a total of five consecutive financial years. The process will be data driven to ensure transparency, automaticity and prompt disbursement of incentives.

“For the effective operation and smooth implementation of the scheme, detailed guidelines shall be notified separately. The guidelines are to be read along with the scheme. In case of any inconsistency between the scheme and the guidelines, the provisions of the scheme shall prevail,” the notification added.

Entitlement under SEIS for services exports during 2019-20 capped at Rs 5 cr: DGFT

Source: Financial Express, 23 September 2021

Scrips or certificates provided under the scheme can be used for payment of basic and additional customs duties on goods imported. These are freely transferable. If an exporter is not in a position to use the scrip, they can sell it on the open market.

The government on Thursday said it has imposed a limit on the total entitlement under services export incentive scheme SEIS for shipments made during 2019-20, at Rs 5 crore per exporter.

The Directorate General of Foreign Trade (DGFT) has notified a list of eligible services and rates under the Services Exports from India Scheme (SEIS) for exports made during 2019-20 is being notified.

“A limit of total entitlement under SEIS has been imposed for service exports rendered in the period April 1, 2019, to March 31, 2020, and capped at Rs 5 crore IEC (import-export code),” the DGFT said in a notification.

Further, it has been notified that the facility to claim benefits under SEIS on payments in Indian rupees would not be available for services rendered in 2019-20.

The deadline for submission of SEIS for 2019-20 will be December 31, 2021, and SEIS applications for 2019-20 will become time-barred after December 31 this year.

Services Export Promotion Council of India (SEPC) Chairman Maneck Davar said the move will benefit small and medium enterprises in the sector.

“SEPC is also committed to guide and advise all exporters on obtaining SEIS benefits. It has also written to DGFT to extend the date of filing for 2019-20 to March 31, 2022,” he said.
Depending on the nature of services, the government gives duty credit scrips or certificates. The scheme is offering a reward at 3 per cent or 5 per cent of net foreign exchange earned and covers service providers located in India.

Scrips or certificates provided under the scheme can be used for payment of basic and additional customs duties on goods imported. These are freely transferable. If an exporter is not in a position to use the scrip, they can sell it on the open market.

Under five per cent rate, the sectors include professional services (like legal, taxation, engineering, veterinary and urban planning); research and development; communication (radio and television, sound recording); construction, educational, environmental, and health. Similarly, under 3 per cent rate, the services include advertising, investigation and security, packaging and printing.

In a separate notification, the DGFT said that an additional option is provided to exporters to avail extension in export obligation period till December 31 this year in case of specified advance authorisations and EPCG authorisations without any composition fees.

This benefit is, however, subjected to a five per cent additional export obligation on balance exports to be fulfilled.

EPCG (Export Promotion Capital Goods) is an export promotion scheme under which an exporter can import a certain amount of capital goods at zero duty for upgrading technology related to exports. On the other hand, advance authorisation (AA) is issued to allow duty-free import of inputs, which is physically incorporated in the export product.

For both AA and EPCG authorisations, where the original or extended export obligation period is expiring during the period between August 1, 2020, and July 31, 2021, the obligation period would be extended till December 31, 2021, without any composition fees, it said.

Goods exports to hit record $190 billion in first half of FY22: Commerce and industry minister Piyush Goyal

Source: Financial Express, 24 September 2021

After a Covid-induced fall of 7% last fiscal, exports this fiscal have been supported by improved order flow from advanced markets following an economic resurgence there and rise in global commodity prices.

Merchandise exports could hit a record $190 billion or even cross this level in the first half of FY22, commerce and industry minister Piyush Goyal said on Thursday. While the export would be 51% higher than a year before, aided by a conducive base, it would also exceed the pre-pandemic (same period in FY20) level by 19%.

Addressing exporters in Mumbai, the minister said exports already hit $185 billion by September 21 this fiscal and exuded confidence that the country would realise the ambitious target of $400 billion in FY22.

After a Covid-induced fall of 7% last fiscal, exports this fiscal have been supported by improved order flow from advanced markets following an economic resurgence there and rise in global commodity prices.

Commenting on industry demand for regulating shipping costs and curb the recent surge, the minister indicated that any such step could act both ways. When costs will go down, the shipping lines and others would urge the government to do something as well, he explained, indicating that market-driven rates usually work better. Moreover, the surge in shipping costs is a global phenomenon, and not peculiar to India. Goyal said the government is also liberalising the rules to promote exports from special economic zones (SEZs).

As such, amid the surge in shipping costs, the government recently extended some relief to exporters of specified select products by reintroducing the Transport and Marketing Assistance (TMA) scheme, with wider coverage and much larger support, for one year.

Under the TMA, which was valid up to March 2021, the government reimbursed exporters a certain portion of freight charges and offered assistance for the marketing of select agricultural produce. Rates of assistance have been increased by 50% for exports by sea and 100% for those by air.

The minister also said permission to allow e-commerce seamlessly for artificial jewellery up to $800 are under consideration. Moreover, he is “fighting hard” for the gem and jewellery sector to get a waiver from the 5% duty that is currently charged in the UAE, as part of the proposed free trade agreement with the UAE.

Meanwhile, speaking at the National Institute of Industrial Engineering (NITIE) in Mumbai, Goyal said India is at a “nascent stage” in industrial engineering study and research, which is essential for creating robust supply chains.

See formal sector at pre-Covid level by year-end: Montek Singh Ahluwalia

Source: Business Standards, 24 September 2021

The Indian economy has bottomed out and the formal sector is likely to get back to pre-pandemic levels by the end of this year, former deputy chairman of erstwhile Planning Commission Montek Singh Ahluwalia said on Thursday.

Addressing a virtual event, Ahluwalia said he is in favour of National Monetisation Pipeline (NMP) that will look to unlock value in infrastructure assets across sectors ranging from power to road and railways.

“One of the main positives is that the economy has actually bottomed out. And the formal sector may be getting back to pre-pandemic levels by the end of this year, it will be different for different sectors, service sectors, etc,” he said.

Ahluwalia opined that if the formal sector sees economic rebound, then the informal sector will also follow it, adding that a healthy economic rebound happens, when private sector investments also pick up.

The Indian economy grew by a record 20.1 per cent in the April-June quarter, helped by a very weak base of last year and a sharp rebound in the manufacturing and services sectors in spite of a devastating second wave of COVID-19 cases.

The Reserve Bank of India (RBI) has lowered the country’s growth projection for the current financial year to 9.5 per cent from 10.5 per cent estimated earlier, while the World Bank has projected India’s economy to grow at 8.3 per cent in 2021.

On recent measures by the government with regards to infrastructure, Ahluwalia said,” I am in favour of NMP, if it is properly done then it will be a good thing.”

Last month, Finance Minister Nirmala Sitharaman had announced a Rs 6 lakh crore National Monetisation Pipeline.

Replying to a question on reforms in the agriculture sector, he said modernisation of agriculture is desirable.

“But the way it (implementation of three farm laws by the Centre) was handled, it created a huge amount of doubt and suspicion (among farmers),” Ahluwalia opined.

Hundreds of farmers, mainly from Punjab, Haryana and western Uttar Pradesh, are camping near Delhi’s borders since November last year demanding that the Centre repeal the three contentious farm laws.

The government and unions representing farmers, who have been camping at Delhi’s border in protest against the three laws that they say will end state procurement of crops at MSP, have held 11 rounds of talks, the last being on January 22. Talks broke down after widespread violence during a tractor rally by protesting farmers on January 26.

Enacted in September 2020, the three farm laws have been projected by the Centre as major reforms in the agriculture sector that will remove the middlemen and allow farmers to sell their produce anywhere in the country.

The protesting farmers, on the other hand, have expressed apprehensions that the new laws would pave the way for eliminating the safety cushion of the minimum support price and do away with the mandi (wholesale market) system, leaving them at the mercy of big corporates.

‘One-stop shop’: Single-window approval system for investors launched

Source: Financial Express, 23 September 2021

Delay in various clearances and cumbersome application process have long discouraged large multi-national corporations from either investing in India or scaling up operations in the country, something that the government has been seeking to change.

Commerce and industry minister Piyush Goyal on Wednesday launched a national single-window system, which aims to become a “one-stop shop” for investors to apply for various approvals and make it easier for them to set up units.

Through the system, the government promises a single online interface to identify, seek and track various clearances from key departments. The idea is to spare investors the trouble of running from one department to the other or having to submit same sets of information across multiple platforms, for obtaining various permits. Moreover, they will get to know what all approvals are required for setting up a facility.

Delay in various clearances and cumbersome application process have long discouraged large multi-national corporations from either investing in India or scaling up operations in the country, something that the government has been seeking to change.

To start with, the portal hosts approval requirements across 18 central government departments and nine states, while another 14 central departments and five states will be added to it by December 21.

Launching the new system, Goyal said it will “usher in Azadi (independence) from the legacy of running to government offices for approvals and registrations,” Goyal said. It will bring in transparency, accountability and responsiveness in the ecosystem and all information will be made available on a single dashboard, he added.

The departments that have already joined include corporate affairs, environment, labour, railways, commerce and industry, revenue, power, food & consumer affairs and textiles. The states that are already on board are Gujarat, Uttar Pradesh, Andhra Pradesh, Karnataka, Odisha, Punjab, Uttarakhand, Himachal Pradesh and Goa.

The portal will progressively onboard a greater number of approvals and licenses, based on user feedback.

Last year, a status check ordered by a committee of secretaries (CoS) revealed that the 35 central ministries/departments among them are presiding over a regime of as many as 767 pre-establishment/pre-operation licences!

Investments remain critical to the country’s resurgence story, as private consumption has been badly bruised by income losses in the aftermath of the pandemic. Private final consumption expenditure shrank 11.9% in real and 2.7% in nominal terms in the June quarter from the pre-pandemic levels.

The system is spearheaded by the department for the promotion of industry and internal trade and Invest India.

The single window system has some key modules, including Know Your Approval (KYA) Service. This is an intelligent information wizard that generates a list of approvals required by any business to commence operations. This service was launched in July, with over 500 approvals across 32 central government departments and over 2,000 approvals across 14 states.

It also prescribes a common registration form to ensure a single point of submission of information and documents across ministries and states.

There is a state registration form, which enables investors to have seamless single-click access to respective state’s single-window system.

There is a document repository, which is an online centralized storage service for investors to enable one-time document submission and use the same across multiple approvals. This eliminates the need to submit documents at multiple portals.

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Walmart, Flipkart sign MoU with Tamil Nadu govt, to support MSMEs

Source: Business Standards, 22 September 2021

Walmart and Flipkart on Wednesday announced the signing of memorandum of understanding with the Department of Micro, Small and Medium Enterprises (MSME) in Tamil Nadu to establish long-term cooperation for providing capacity building support.

Through the Walmar Vriddhi Supplier Development Programme (Walmart Vriddhi), delivered by knowledge partner Swasti, opportunities are provided to the MSMEs, small businesses to join online, offline and export channels and to reach pan-India as part of supply chains of Walmart, Flipkart and other companies.

The programme would organise workshops also to further enable growth and the development of the small and medium businesses in the State, a press release said here.

“Through Walmart Vriddhi, we look forward to partnering with the government of Tamil Nadu and supporting its efforts to build a robust MSME eco system…we are committed to tripling our exports from India to USD 10 billion annually by 2027, and will keep extending our support to small businesses,” vice-president (International Partnership Services) Walmart Nidhi Munjal said.

Chief Minister M K Stalin said, “Tamil Nadu is home to one of the largest number of MSMEs in the country that are renowed all over the world for their product quality and craftsmanship. Our MSMEs are the backbone of our economy, and their growth is key to help us achieve our vision of making Tamil Nadu a USD 1 trillion economy by 2030. We welcome the MoU With Walmart, Flipkart and Swasti, that shall further strengthen our MSME ecosystem.”

Senior director and Head-marketplace, Flipkart, Jagjeet Harode said, “Flipkart has made significant supply chain and infrastructure investments in the State of Tamil Nadu. Furthering our commitment to the State, we recently launched a dedicated grocery fulfillment centre in Coimbatore that shall generate significant employment opportunities for the youth of the State.”

“Through programmes like Walmart Vriddhi and Flipkart Samarth, we are committed to empowering Tamil Nadu’s MSMEs, artisans and craftsmen and will continue providing them the eco system support they require to grow,” he added.

India committed to clean energy-based economy, says Nitin Gadkari

Source: Business Standards, 22 September 2021

Union Minister Nitin Gadkari on Wednesday said India is committed to an eminently achievable clean energy-based economy, and added that the country will soon have a policy for flex-fuel engines.

The road transport and highways minister further said India is shifting its public transport fleet to green fuels like bio-CNG, ethanol, methanol, electricity and green hydrogen, which will also provide citizens some respite from surging petrol prices.

“India is committed to an eminently achievable clean energy-based economy, through an annual road-map for production, supply of ethanol till 2025-26, and systems for its countrywide marketing,” he said while addressing a virtual event of industry body CII.

Gadkari said his ministry is in talks with automakers for flex-fuel engines and for using biodiesel and LNG in the construction equipment industry.

“We will soon announce a policy for flex-fuel engines. This policy will encourage automobile manufacturers to produce such engines,” he said.

The minister pointed out that India is one of the fastest-growing economies leading through sustainable and climate-neutral development.

While the government is focusing to create an investor-friendly ecosystem to promote domestic manufacturing, “parallelly we are also giving importance to infrastructure development,” he said.

As expected, India is gaining good momentum in the electric vehicle (EV) ecosystem, he noted.

“There is a good response for battery operated small electric vehicles like e-scooter, electric three-wheelers, e-rickshaws, e-carts, and e-bikes in the country,” he said.

The minister added the road ministry is also planning to run a railway, metro, and long-run intercity buses on green hydrogen.

“Both battery electric vehicle and fuel cell vehicle technologies are complementary to each other and are all set to overtake fossil-run automotive by 2050 in the country,” the minister said.

Volkswagen gives priority to India ahead of big SUVs launch

Source: Economic Times, 23 September 2021

Amid severe shortage for semiconductor chips globally, the world’s largest automaker Volkswagen AG has prioritized driving its Euro One billion 2.0 India plan to a good start.

With preference given to launch markets – where India is a key critical pillar for the emerging market, Skoda Auto Volkswagen India will source a respectable quantity of chips to make the most of expected high demand for Skoda Kushaq and Volkswagen Taigun.
Launched a couple of months ago, Skoda Kushaq has already secured over 10,000 bookings and the Group will be launching the Taigun SUV under the VW brand officially on Thursday.

At present Skoda Auto Volkswagen is producing 300 units per day of new SUVs, which it plans to scale it up to 435 cars per day in the coming months. The company is also set to commence its third shift of production in November with two new sedans from Skoda and VW on the anvil.

Tamil Nadu eyes $100 billion exports by 2030, signs MoUs worth Rs 2,120.54 crore

Source: Economic Times, 22 September 2021

The Tamil Nadu government on Wednesday signed Memorandum of Understanding for 24 projects worth Rs 2,120.54 crore, while Chief Minister M K Stalin said the government’s goal is to increase the state’s exports to USD 100 billion by 2030.

The state government’s Micro Small and Medium Enterprises Trade and Investment Promotion Bureau (M-TIPB) entered into an MoU with Flipkart/Walmart for promotion of e-commerce among MSMEs in Tamil Nadu through a supplier development programme.

This initiative envisages expanding the capabilities of MSMEs through intensive training and support and equip them to scale up their businesses and become part of domestic and global supply chains.

M-TIPB and The Indo German Chamber of Commerce entered into an MoU for collaboration between MSMEs in the state and businesses in Germany. The MoU would facilitate linkages, interaction, technology collaboration programmes and export opportunities for MSMEs in the state.

Presided by Chief Minister Stalin, the inaugural of the Tamil Nadu Exports Conclave, organised by the departments of the state and central governments to showcase the strengths of Tamil Nadu in exports, was held here today.

The conclave is part of nation-wide events to commemorate the 75th anniversary of Indian Independence (Azadi Ka Amrit Mahotsav).

As part of the event, Stalin released Tamil Nadu Exports Promotion Policy (TNEPP) and MSME Exporters Handbook and inaugurated an Export Exhibition, which saw the participation of 21 export units, export promotion centres and government departments.

On behalf of the Industries Department, 14 MoUs were signed with the 100 per cent Export Oriented Units, with a cumulative investment of Rs 1880.54 crore, creating employment opportunities for 39,150 persons, an official release here said.

Another 10 MoUs were signed on behalf of the MSME Department, with a cumulative investment of Rs 240 crore, providing employment opportunities for 2,545 persons.

In his address, Stalin said “We have set up a target of one trillion USD economy for Tamil Nadu by 2030. To achieve this, the state’s exports should be increased to 100 billion USD from the present 26 billion USD.”

To help attain the goal, public and private sector companies should work in cohesion, he said.

The state shall adopt a two-pronged approach of export promotion and export diversification to achieve this objective, a key aspect of the TNEPP.

The government has also planned developing two “Export Enclaves” at Manallore and Tuticorin with world class infrastructure amenities for exporters, the CM said.

The government has identified 10 export hubs and would strengthen export related common infrastructure projects in these places by reimbursing 25 per cent of the project cost, subject to a ceiling of Rs 10 crore per hub.

The 10 identified locations are Chennai, Coimbatore, Hosur, Kancheepuram, Tirupur, Karur, Madurai, Ambur, Tuticorin and Pollachi, the CM said.

Schemes have also been formulated to incentivise production of value added products (Special Package Incentives) by exporters.

Such initiatives are part of the TNEPP.

Every district produces several unique products and to market them globally, Export Centres are being set up in every district.

Similar to the “Made in India” tagline, “Made in Tamil Nadu” should echo and “this is not only our desire, it is our goal too and our journey will be towards that goal,” he said.

With Rs 1.93 lakh crore exports, Tamil Nadu is the third biggest state in India in exports, and its share in national exports is 8.97 per cent (2020-21), Stalin said.

Citing sector-wise statistics on exports from the state, including a 58 per cent and 45 per cent share in apparel and accessories and footwear respectively, Stalin said “we should not be satisfied with this victory, the export per centage should go up every year.”

Stressing on producing value added products to drive exports, he said electric vehicles, food processing and defence are among the sectors that should gain momentum to add up to Tamil Nadu’s export capacity.

As part of the government’s efforts to further boost exports, “State Export Promotion Committee” would be set up and the Chief Secretary shall lead the panel, he said.

Stalin said a Project Monitoring Unit, an exclusive body, has been set up to monitor export schemes of MSMEs.

A first in the country, the Tamil Nadu government is setting up an “International Furniture Park” at Tuticorin, an export oriented initiative and this would drive the industrial growth of southern regions of the state.

As a result of the cancellation of the one per cent market cess on cotton and waste cotton by his government, Stalin said, “I am happy to announce that the Cotton Corporation of India has now come forward to set up cotton depots in Salem, Madurai, Coimbatore and Virudhunagar.”

In total, investments committed in 24 projects is Rs 2,120.54 crore and would bring employment opportunities to 41,695 people.

The investments covers various sectors like textiles, chemicals, IT / ITES, steel, leather, apparels and general manufacturing.

Such investments would be made across the state in various locations like Chennai, Kanchipuram, Tirupathur, Krishnagiri, Madurai, Salem, Tiruchirappalli, Thanjavur, Thoothukudi, Dindigul and Tirunelveli districts.

Stalin also issued land allotment orders for the first two companies that are set to come up in an exclusive Polymer Park at nearby Ponneri to cater to the needs of the polymer industry.

The MSME Exporters Handbook provided comprehensive information about various export clearances and processes required for MSMEs.

Ministers for Industries and Rural Industries, Thangam Thennarasu, and T M Anbarasan respectively, Chief Secretary V Irai Anbu, Additional Secretary, Union Commerce Ministry, Sanjay Chadha and Additional Director General of Foreign Trade, Shanmuga Sundaram participated.

FDI equity inflows up 112% to $20.42 billion in April-July: Govt

Source: Economic Times, 22 September 2021

Foreign direct investments (FDI) into the country more than doubled to $20.42 billion during the April-July period of the current fiscal, the commerce and industry ministry said on Wednesday. This is a whopping 112% increase from $9.61 billion of FDI equity inflows in the same period last year.

Total FDI- that includes equity inflows, reinvested earnings and other capital-rose 62% on-year to $27.37 billion during the first four months of FY22 as against $16.92 billion in the corresponding period a year ago.

“Automobile Industry has emerged as the top sector during the first four months of FY22 with 23% share of the total FDI Equity inflow followed by Computer Software & Hardware (18%) and Services Sector (10%) respectively,” the ministry said in a statement.

Under the sector Automobile Industry, majority of FDI Equity inflow of 87% was reported Karnataka.

“Measures taken by the government on the fronts of FDI policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country,” the ministry said.

Overall, among states, Karnataka was the top recipient of investment from overseas with 45% share of the total FDI equity inflows followed by Maharashtra (23%) and Delhi (12%).