Bharat Government Announces Extension of PLI Scheme for Automotives

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Under this Rs. 25,938 crore scheme, incentives will be performance based with a provision for recovery.

The Bharat government has recently announced a modification to the production-linked incentive (PLI) scheme for the automobile and auto components sector, extending the scheme’s duration by one year, now set to conclude on March 31, 2028.This scheme, with a budget of Rs 25,938 crore, is designed to stimulate domestic production of advanced automotive technology products and to encourage investments within the automotive manufacturing value chain.

Originally, the incentives were slated to apply to the determined sales value starting from the financial year 2022-2023, spanning five consecutive financial years until 2026-2027. With the recent amendments, the incentive period has been shifted to cover five consecutive financial years from 2023-2024 to 2027-2028, with the disbursement of incentives commencing in the financial year 2024-2025.

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Image for representational purpose only

A key amendment to the scheme stipulates that if an approved company fails to meet the required increase in determined sales value over the first year’s threshold, it will not receive any incentive for that particular year. Although, there is a provision for recovery; if the company manages to meet the threshold in the following year, it would then become eligible for benefits. The new threshold is calculated based on a 10% year-on-year (YoY) growth over the first year’s threshold. This update was provided by the Ministry of Heavy Industries, emphasising a performance-based approach to the distribution of incentives.

The scheme comprises two primary components: the Champion OEM incentive scheme, targeting battery electric and hydrogen fuel cell vehicles, and the Component Champion incentive scheme, focusing on high-technology and high-value components. To be eligible for these incentives, the production of products must achieve a minimum domestic value addition of 50%.

Under the scheme, the government has sanctioned 18 companies in the Champion OEM category, including major players like Maruti Suzuki, Tata Motors, Hero MotoCorp, Bajaj Auto, and Ola Electric. Under the Component Champion category, 67 companies have been approved.

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