The Production Linked Incentive (PLI) scheme for automobile and auto-component manufacturers entered Phase-II in FY2024-25. Component suppliers must now demonstrate minimum capex deployment against committed targets or face forfeiture of accumulated incentives.
With FY2025-26 capex milestones fast approaching and scrutiny from the Department for Promotion of Industry and Internal Trade (DPIIT) intensifying, many mid-sized suppliers remain uncertain about proof requirements, capex eligibility rules, and remediation options.
Market signals
DPIIT has begun cross-referencing PLI capex claims against GST filings, bank statements, and fixed-asset registers. Non-alignment between declared investment and audited accounts is triggering clawback notices and scheme suspension.
PLI Phase-II incentive multipliers favour capex toward EV powertrains, battery housings, and semiconductor-grade precision tooling. Suppliers investing in legacy stamping or fastener lines face lower incentive realisation and competitive margin pressure.
A rising queue of capex-eligibility disputes with DPIIT nodal agencies is causing 6–12 month delays in incentive settlement, straining working capital for smaller manufacturers.
Under PLI scheme rules administered by DPIIT, capex must be capex must be itemised, dated, and traceable to invoices, bank transfers, and fixed-asset schedules. Discrepancies invite audit, scheme suspension, and three-year ineligibility. Vinayakam Consultants helps component manufacturers map capex roadmaps to PLI milestones, prepare auditor-aligned capex certification templates, navigate DPIIT correspondence, and structure investment timing to secure incentive realisation without cash-flow strain.
Your action checklist
- Audit your FY2024-25 capex against PLI commitment letters; identify gaps and prepare remediation capex plan for FY2025-26 before 30 June 2025 cutoff.
- Obtain a dedicated capex audit certificate from your statutory auditor mapping capex invoices, payments, and fixed-asset additions to PLI-eligible categories (EV, precision tooling, automation).
- File a formal capex reconciliation statement with the relevant PLI nodal agency (SIAM for OEMs, ACMA for component suppliers) if any FY2024-25 variance exceeds 5% of committed amount.
- Establish a capex governance register: track all capex with PO date, invoice date, payment date, GST input credit claim, and asset capitalisation date to enable monthly PLI compliance reporting.