PLI scheme for automobile & auto components driving investments, employment, and growth

The Union Cabinet approved the Production-Linked Incentive (PLI) Scheme for the automobile and auto components sector on September 15, 2021, with a budgetary outlay of Rs. 25,938 crore (US$ 3.02 billion). The PLI-Auto Scheme aims to overcome cost disabilities in the industry and boost domestic manufacturing of Advanced Automotive Technology (AAT) products in India. The incentive structure encourages fresh investments in the indigenous manufacturing of AAT products and job creation. Following extensive stakeholder consultations, the Ministry of Heavy Industries (MHI) notified 19 categories of AAT vehicles and 103 AAT components under the scheme on November 9, 2021. 

To promote the "Make in India" campaign, applicants must achieve a Domestic Value Addition (DVA) of 50% to be eligible for incentives, aiming to reduce imports and create domestic and global supply chains. As of December 2024, companies under the scheme have committed over Rs. 25,000 crore (US$ 2.91 billion) in capital investment, including setting up new production facilities and upgrading technology. Tata Motors and Mahindra & Mahindra have significantly invested in electric vehicle (EV) production capacity. The scheme has created thousands of direct and indirect jobs in manufacturing, supply chain management, and R&D. Sales growth in sectors like EVs and critical components has improved significantly. In FY24, the first performance year of the scheme, an aggregate incentive of Rs. 322 crore (US$ 37.53 million) was disbursed in FY25. The PLI-Auto Scheme transforms India's automotive manufacturing ecosystem, reduces import dependence, and integrates the domestic industry into the global supply chain. 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.