Green Light for Innovation: PLI Extension Fuels India’s Electric Vehicle Ambitions

The Indian government, through the Ministry of Heavy Industries, has announced an extension of the Production Linked Incentive (PLI) scheme for the automobile and auto components sector by one year, now stretching to the end of the financial year 2027-2028. This extension is part of a broader initiative to bolster domestic manufacturing of advanced automotive technology products and attract investments in the automotive manufacturing value chain.

Initially, the PLI scheme was set to apply to determined sales value from the financial year 2022-2023 for a total of five consecutive years until 2026-2027. However, with the recent amendments, the incentives will now be applicable from the financial year 2023-2024 to 2027-2028, with the disbursement of incentives beginning in the financial year 2024-2025.

One of the key components of the scheme includes the Champion OEM incentive scheme, which focuses on battery electric and hydrogen fuel cell vehicles. There’s also the component champion incentive scheme, targeted at hi-tech and high-value components. To be eligible for these incentives, the production of products must achieve a minimum domestic value addition of 50%.

The government has approved 18 companies, including major players like Maruti Suzuki, Tata Motors, Hero MotoCorp, Bajaj Auto, and Ola Electric, under the Champion OEM category. Additionally, 67 companies are approved under the Component Champion category.

Significantly, the scheme’s amendments include a provision that if an approved company fails to meet the threshold for an increase in determined sales value over the first year’s threshold, it will not receive any incentive for that year. However, it will be eligible for benefits in the next year if it meets the threshold based on a 10% year-on-year growth over the first year’s threshold.

These amendments are expected to provide greater clarity and support to the sector, promoting growth and competitiveness. The overall indicative incentive under the scheme amounts to ₹25,938 crore. Moreover, the government expects the PLI scheme to create approximately 1.48 lakh new jobs, focusing primarily on battery electric vehicles and hydrogen fuel cell vehicles​​​​​​.



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