Ola Electric, on the brink of its highly anticipated initial public offering (IPO), has marked a significant achievement by securing the domestic value addition (DVA) certificate under the production linked incentive (PLI) scheme for the automobile and auto component industry. This milestone positions Ola Electric as the first Indian two-wheeler manufacturer to receive this certification, reinforcing its commitment to localised manufacturing.
According to a statement released by the startup, the Automotive Research Association of India (ARAI) granted the DVA certificate after rigorous testing of Ola Electric’s products to ensure compliance with the 50% DVA criteria specified under the PLI scheme. The certification now makes Ola Electric eligible for incentives over the next five consecutive financial years, beginning from fiscal 2024. The incentives are projected to range between 13% and 18% of the “determined sales value” (DSV).
A spokesperson for Ola Electric expressed the significance of the PLI certification, stating, “The PLI certification is a testament to our vertically integrated manufacturing capabilities and a significant milestone in our quest to accelerate India’s journey towards clean mobility. The government’s auto PLI scheme will certainly go a long way in localising supply chains and boosting domestic manufacturing while also helping companies achieve economies of scale.”
The PLI scheme for the automobile and auto component industry, launched by the government in 2021 with an allocation of INR 25,938 Cr, aims to stimulate domestic manufacturing and encourage clean mobility practices in the country. Ola Electric joins other major players in the industry, such as Hero MotoCorp, TVS Motor, and Bajaj Auto, in applying for the PLI scheme.
Earlier this week, the Ministry of Heavy Industries disclosed that Mahindra & Mahindra, Tata Motors, and Ola Electric had received DVA certifications for their products from testing agencies.
In addition to the PLI scheme for the auto sector, Ola Electric has secured a 20 GWh capacity under the PLI scheme for advanced chemistry cell (ACC) battery storage. The incentives under this scheme will be applicable for a five-year period, starting from the commissioning of the Ola Gigafactory in Krishnagiri, Tamil Nadu. Ola Electric aims to raise over INR 7,000 Cr in its upcoming IPO, highlighting its dependence on government subsidies as a key risk in its Draft Red Herring Prospectus (DRHP).
