PLI Scheme for Automobile & Auto Components
Background and Context
- India is already a big automobile market, and by 2026, it is expected to become the third-largest in the world by volume.
- However, India lags behind in advanced automotive technologies (like EVs, hydrogen fuel cells, and high-value components).
- To strengthen the sector and reduce import dependence, the government launched the PLI Scheme for Automobile & Auto Components in 2021.
Quick Facts
- Purpose: To increase India’s share in global automotive trade.
- Type: Central Sector Scheme (funded by Union Government).
- Coverage: Both existing and new manufacturing companies.
- Tenure: 2021 – FY 2027-28.
Objectives
- Overcome cost disadvantages faced by Indian manufacturers.
- Achieve economies of scale.
- Build a strong supply chain in Advanced Automotive Products Technologies (AAT).
Incentive Structure
- Rate: Up to 18% incentive for fresh investments in domestic supply chain of AAT.
- Cap: Maximum ₹6,485 crore per group company.
- Base Year: FY 2019–20 (used for calculating eligible sales).
- Tenure of Incentive: 5 consecutive years (from FY 2023–24 to 2027–28).
- Approach: Phased Manufacturing Programme (similar to FAME-II).
Two Key Components
(A) Champion OEM Incentive Scheme
- Applies to Battery Electric Vehicles (BEVs) and Hydrogen Fuel Cell Vehicles (HFCVs) across all segments.
(B) Component Champion Incentive Scheme
- Applies to AAT components, including:
- High-tech vehicle parts
- CKD (Completely Knocked Down) kits
- SKD (Semi Knocked Down) kits, etc.
Eligibility Criteria
For Auto OEMs
- Revenue: Minimum ₹10,000 crore (from auto or auto component business).
- Investment: Minimum ₹3,000 crore in fixed assets.
For Auto Component Manufacturers
- Revenue: Minimum ₹500 crore.
- Investment: Minimum ₹150 crore.
👉 Both existing and new manufacturing companies are eligible if they meet these criteria.
Relation with FAME-II
- Incentives under this PLI scheme are independent of and in addition to the incentives given under FAME-II for EVs.
- This means EV manufacturers can benefit from both schemes simultaneously.
Project Management
- The scheme is monitored by IFCI Limited, a public sector NBFC, as the Project Management Agency (PMA).
Conditions for Incentive
- Minimum 50% domestic value addition required.
- Incentive only once – either at component level or at vehicle level.
- Extra 2% additional incentive for achieving higher growth.
✅ Why is this Important?
- Positions India as a global hub for advanced automotive products.
- Encourages investment in EVs, hydrogen mobility, and AAT components.
- Strengthens Make in India & Atmanirbhar Bharat in the automobile sector.
- Generates employment and improves export competitiveness.
In summary: The PLI Scheme for Automobiles & Auto Components (2021–2028) is India’s roadmap to move from being a large automobile market to becoming a global automotive manufacturing hub, especially in the green and advanced technology segments.