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Policies and Schemes of the Auto Components Sector: Spotlight on the PLI Scheme

Powering Progress: Transforming Challenges into Opportunities in Auto Manufacturing

As of January 15, 2025, the Indian government is actively enhancing the auto components sector through various initiatives, notably the â€œProduction-Linked Incentive (PLI) Schemeâ€. This scheme aims to boost domestic manufacturing and attract investments in advanced automotive technologies.

Overview of the PLI Scheme:

Launched with an allocation of 25,938 crores (approximately $3.5 billion), the PLI Scheme for Automobile and Auto Components focuses on:

Cost Reduction: Addressing manufacturing cost challenges.
Economies of Scale: Encouraging larger production volumes.
Job Creation: Projected to generate over 750,000 jobs in five years.
Supply Chain Development: Strengthening supply chains for advanced technologies.

Key Components:-

The PLI scheme consists of two main components:

Champion OEM Incentive Scheme:
- Targets manufacturers of Battery Electric Vehicles (BEVs) and Hydrogen Fuel Cell Vehicles (HFCVs).
- Requires a cumulative sales value of 1,250 crores over five years.
Component Champion Incentive Scheme:
- Focuses on auto component manufacturers producing parts for BEVs and HFCVs.
- Companies must report annual sales specific to these components.

Eligibility Criteria:

To qualify for the PLI scheme:

OEMs must have a minimum global revenue of 10,000 crores and an investment of at least 3,000 crores in fixed assets.
Auto Component Manufacturers need a minimum global revenue of 500 crores and an investment of at least 150 crores.

Expected Impact:

The PLI scheme is expected to yield significant results:

Investment Growth: Anticipated fresh investments exceeding 42,500 crores.
Production Increase: Incremental production valued at over 2.3 lakh crores.
Global Trade Enhancement: Aiming to boost India's share in global automotive trade.

Conclusion:

The PLI scheme is a transformative initiative for India's auto components sector, designed to establish the country as a global manufacturing hub. By incentivizing advanced automotive technologies, the government seeks to foster innovation, enhance competitiveness, and create a sustainable ecosystem for growth in the automotive industry.

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