Indian gov allocates Rs 3,500 crore for PLI Auto, Components scheme in FY25

In what could be a major boost to the financials of manufacturers and component makers, today’s interim budget has allocated Rs 3,500 crore towards the production-linked incentive scheme for automobiles and components for the next financial year. The disbursement of incentives under the scheme will start in 2024-25.

In 2021, the government approved the output-linked incentive scheme with a budgetary outlay of Rs 25,938 crore for five years to boost domestic manufacturing of advanced automotive technology products, and attract investments in the automotive manufacturing value chain. Initially, the incentives were applicable on determined sales value from the financial year 2022-2023 till 2026-2027, but the tenure was recently extended by one year to March 31, 2028.

The scheme has two components – the Champion OEM Incentive scheme for battery electric and hydrogen fuel cell vehicles, and the Component Champion incentive scheme for hi-tech and hi-value components. The incentives are given for the production of products with a minimum domestic value addition of 50 percent. 

The government has approved 18 companies – including Maruti Suzuki, Tata Motors, Hero MotoCorp, Bajaj Auto and Ola Electric – under the Champion OEM category and 67 companies under the Component Champion category of the scheme.

Automakers including Tata Motors and Mahindra have secured domestic value certificates, and recently ARAI awarded the first PLI-AUTO certificate to Tata Motors in the M3 and N1 category. As per the budget documents, the revised estimate of the allocation for the PLI Auto scheme for the current financial year is Rs 484 crore. The full budget for the next financial year will be presented in July this year once the new government is formed after the Lok Sabha elections.

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