Context: As the scheme, in its third year now, is production-linked, higher output levels necessitate a corresponding scale-up in incentives.
- The Ministry of Heavy Industries (MHI) has proposed doubling the allocation for the Production Linked Incentive (PLI) scheme for automobiles and auto component manufacturers to ₹5,800 crore in the upcoming financial year. The scheme had received ₹2,818.85 crore in FY 2025-2026.
- The PLI auto scheme incentivises local production of only those products that achieve a domestic value add (DVA) of 50%. The scheme was focused on zero emission vehicles (ZEVs), i.e., battery electric vehicles and hydrogen fuel cell vehicles.
- The scheme was announced in 2021, but FY 2023-24 was the first performance year, and an amount of ₹322 crore was disbursed to four approved applicants in FY 2024-25. For the performance year 2024-25, a total amount of ₹1,999.94 crore was disbursed for five approved applicants.
- Looking ahead, the target allocation for FY 2027-28 is nearly ₹8,000 crore, increasing to ₹9,500 crore in the fifth year.
- These allocations are aimed at achieving the total outlay of ₹25,938 crore as defined when the scheme was launched in 2021.
- Explaining the rationale behind seeking doubling of allocation, that in the initial years, the OEMs were focused on setting up manufacturing plants, which required substantial capital investment. Now, in the third year of the scheme, the focus would be on ramping up production output. As the scheme is production-linked, higher output levels necessitate a corresponding scale-up in incentives.
| Aspect | Details |
| Launch Year | 2021 |
| Implementing Ministry | Ministry of Heavy Industries (MHI) |
| Total Financial Outlay | ₹25,938 crore |
| Scheme Duration | FY 2022–23 to FY 2027–28 (5 years) |
| Primary Objective | Boost domestic manufacturing of Advanced Automotive Technology (AAT) products; promote EVs & hydrogen fuel cell vehicles; reduce import dependence. |
| Eligible Applicants | OEMs (vehicle manufacturers) and auto component manufacturers producing AAT products. |
| Key Focus Areas | Battery Electric Vehicles (BEVs), Hydrogen Fuel Cell Vehicles, and Advanced Components (Sensors, ECUs, ADAS, EV drive trains). |
| Incentive Structure | Linked to incremental sales of AAT products over the base year (FY 2019–20). |
| Domestic Value Addition (DVA) | Minimum 50% required to qualify for incentives. |
| Performance Period | FY 2023–24 to FY 2027–28 |
| Approved Applicants | 95 companies (20 OEMs + 75 component manufacturers). |
| Major Beneficiaries | Tata Motors, Mahindra & Mahindra, Bajaj Auto, TVS Motor, Ola Electric, Hyundai, Suzuki, Bosch, Bharat Forge. |
| Investments Attracted | ₹35,657 crore (as of Dec 2025). |
| Incentives Disbursed | ₹2,321.94 crore (till Dec 2025). |
| Employment Generated | ~49,000 jobs. |
| Coverage | Incentives for ~13.6 lakh EVs across 2W, 3W, cars, and buses. |
| Complementary Schemes | FAME-II, NEMMP, and PLI for Advanced Chemistry Cell (ACC) batteries. |
| Key Challenges | High DVA thresholds, EV-centric tilt (excluding traditional tech), and low export competitiveness (~1% global share). |
| Strategic Significance | Strengthens EV ecosystem, supports climate goals, and positions India as a global hub for advanced mobility tech. |
Source: The Hindu