The Production-Linked Incentive (PLI) Scheme for the automobile and auto components sector, approved by the Union Cabinet on September 15, 2021, aims to transform India’s automotive industry. With a budgetary outlay of Rs. 25,938 crore (US$ 3.02 billion), the scheme focuses on promoting Advanced Automotive Technology (AAT) production in India. By addressing cost disabilities, the PLI-Auto scheme encourages domestic manufacturing, particularly in electric vehicles (EVs) and critical auto components. This initiative strengthens the "Make in India" campaign, focusing on domestic value addition and job creation.

The PLI-Auto Scheme targets the Domestic Value Addition (DVA) of 50% for applicants to be eligible for incentives. The scheme encompasses 19 categories of AAT vehicles and 103 AAT components, announced after detailed consultations with stakeholders. By promoting the production of advanced technologies, the scheme not only supports Make in India but also aims to reduce India’s reliance on imports while integrating the country’s automotive sector into the global supply chain.

As of December 2024, companies participating in the scheme have already committed to over Rs. 25,000 crore (US$ 2.91 billion) in investments. This includes setting up new production facilities and upgrading technology to enhance manufacturing capabilities. Tata Motors and Mahindra & Mahindra, major players in the Indian automobile market, have significantly invested in electric vehicle production capacity, reflecting the growing importance of EVs in India’s automotive future. These investments not only contribute to the growth of the EV sector but also help in setting up critical components and infrastructure needed for their mass production.

The scheme has created numerous direct and indirect jobs across the automotive value chain, including in manufacturing, supply chain management, and research and development. As a result, sectors like EVs and critical auto components have seen substantial growth in sales. In the financial year 2024, which marked the first performance year of the scheme, a total incentive of Rs. 322 crore (US$ 37.53 million) was disbursed. This disbursement shows the tangible benefits of the scheme and highlights its positive impact on India’s automotive ecosystem.

The PLI-Auto Scheme not only boosts domestic manufacturing but also plays a crucial role in the global supply chain, positioning India as a key player in the automotive industry. The scheme’s focus on advanced automotive technologies is integral to making India a hub for the production of next-generation vehicles. By incentivizing local manufacturers, the scheme fosters a shift towards a more self-reliant and sustainable automotive industry.

In conclusion, the PLI-Auto Scheme is a crucial step towards transforming India's automotive manufacturing landscape. By driving investments, creating jobs, and reducing import dependence, the scheme has significantly contributed to the growth of the automobile and auto components sector. The government's focus on promoting electric vehicle production and advanced technologies positions India as a key player in the global automotive industry, making the PLI-Auto Scheme a game-changer for the sector.

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