The PLI auto scheme is a transformative government initiative offering financial incentives worth ₹25,938 crores to boost the manufacturing of advanced automotive technology, electric vehicles, and hydrogen-fueled vehicles in India.
Launched in 2020 as part of Make in India auto incentives, the PLI scheme 2025 India continues to attract both existing manufacturers and new investors through production-linked benefits for component makers.
In this blog, we will cover PLI auto eligibility criteria, including minimum investment thresholds and advanced technology requirements, to leverage this opportunity and contribute to India’s clean energy transition.
What is a PLI Scheme?
The Production Linked Incentive (PLI) auto scheme represents one of India’s most ambitious manufacturing transformation initiatives. It represents the sum of the government incentives that are linked to the manufacturing performance of companies.
The PLI automobile India programme aims to position India as a global manufacturing hub by improving its local supply chain, downstream operations, and investing in high-tech production. It is an old and popular tool used by governments to spur the production of goods that are necessary for social welfare and economic growth.
PLIs could be of any form; they could be tax rebates, import and export duty concessions, or even more favourable land acquisition terms. The benefits are passed on to the final customers of the goods in terms of lower prices. These create a win-win situation for manufacturers, consumers, and the economy at large.
The vision of NPE 2019 (National Policy on Electronics) is to make India a global hub for electronics system designs and manufacturing. The government is planning to do so by encouraging and driving capabilities in the country to develop core components and creating an enabling environment for the industry to compete with globally manufactured products.
What are the Sectors Covered Under the PLI Scheme?
There are 13 sectors under the PLI scheme 2025:
- Auto Components
- Automobile
- Aviation
- Chemicals
- Electronic system
- Food processing
- Medical devices
- Metals and Mining
- Pharmaceuticals
- Renewable Energy
- Telecom
- Textiles & Apparel
- White Goods
Each scheme is applicable for a 3-6 year time duration, depending on the sector. The PLI auto scheme specifically operates over a 5-year period, making it one of the medium-term incentive programmes under the broader Make in India framework.
What’s interesting in the PLI scheme for the Automobile and Auto components Industries?
The federal government of India approved the PLI auto scheme for automobiles and auto components on September 15, 2021. The government approved a budgetary allocation of ₹25,938 crore aimed at boosting the manufacturing capacity and production of electric and hydrogen-fuelled vehicles. As part of the PLI scheme, this initiative remains applicable for 5 years. This will help push forward our country’s transition to clean energy and elevate India’s share in the global automotive trade business.
The PLI automobile initiative specifically incentivizes the manufacturing of state-of-the-art automotive technology vehicles and products such as sunroofs, automatic gears, warning systems, adaptive front lighting, and advanced driver-assistance systems (ADAS). This scheme is available for both existing as well as new investors in the market.
The scheme comprises 4 key categories:
- Component Champion
- Global-Sourcing
- Vehicle Champion
- Product-linked- Bonuses or Incentives
The Indian government and its representatives have been exceptionally transparent with their objective, which is to offer financial incentives to improve the local manufacturing of automotive technology in the country and attract investments in the manufacturing value chain. However, OEMs and component production firms need to invest first before they can receive the incentives. This investment-first approach ensures serious commitment to the Make in India vision.
Importantly, the scheme excludes petrol, CNG, and diesel segments as these energy sources have sufficient capacity in the country. The focus on electric and hydrogen-fuelled vehicles aligns with global sustainability trends and positions the PLI automobile programme as a forward-looking initiative.
According to ICRA (Investment Information and Credit Rating Agency of India Limited), the PLI incentives are linked to sales and are touted to be in the range of 13-16% on the computed sales value of the OEMs, and 8-11% on the calculated sales value for the auto component manufacturers.
Key Guidelines for PLI Auto Eligibility
Understanding PLI auto eligibility criteria is essential for manufacturers planning to participate in this programme. Some key guidelines for PLI scheme approvals are:
Eligibility Criteria for Existing Automotive Firms
The existing company should have a minimum annual turnover of:
- Auto OEM: Minimum ₹3,000 crore
- Auto Component: Minimum ₹150 crore
Eligibility Criteria for Fresh Automotive Companies
To qualify for PLI as a new entrant, companies must have no revenue from the manufacturing of automobiles or auto parts as of March 31, 2021. To secure the PLI scheme, they have to present a clear business plan which shows how their company will invest in the development of the country and will generate revenue from the advanced automotive-technology vehicles or components they are manufacturing. This provision makes the PLI scheme inclusive for startups and new investors committed to advanced manufacturing.
Minimum Latest Cumulative Domestic Investment Criteria
This has to be accomplished by all the companies, whether they are existing automobile or new automobile companies, from April 1, 2021. Meeting these investment benchmarks is critical for maintaining eligibility throughout the scheme period.
Incentive Structure Under the PLI Auto Scheme
The PLI scheme 2025 offers attractive incentive slabs based on determined sales value, making it one of the most competitive programmes globally.
Incentive Brackets for Champion OEM and New Non-Automotive (OEM) Investor Company
| Determined Sales Value (Billions) | Incentives (% of Determined Sales Value) |
| Less than or equal to INR 20 billion | 13% |
| Greater than INR 20 billion – INR 30 billion | 14% |
| Greater than INR 30 billion – INR 40 billion | 15% |
| Greater than INR 40 billion | 16% |
| Cumulative determined sales value of INR 100 billion over 5 years | Extra 2% |
Incentive Slabs for Component Champion and New Non-Automotive Component Investor Company
| Determined Sales Value (Billions) | Incentives (% of Determined Sales Value) |
| Less than or equal to ₹2.5 billion | 8% |
| Greater than ₹2.5 billion – ₹5 billion | 9% |
| Greater than ₹5 billion – ₹7.5 billion | 10% |
| Greater than ₹7.5 billion | 11% |
| Cumulative determined sales value of ₹12.50 billion over 5 years | Extra 2% |
| Battery, electric vehicles, and hydrogen-fuelled vehicles components | Extra 5% |
PLI Auto Scheme News Update
Government Spent ₹1,181 Crore for PLI Scheme Till January 31: DoT
The government declared it had disbursed ₹1,181 crore as of January 31, 2023, for the production-linked incentive programme, effective from April 1, 2021.
The Department of Telecommunication said in the monthly report for the Cabinet on significant developments of the DoT for the month of February that the total sales from this programme in the month amounted to ₹13,541.27 crore and the total exports amounted to ₹5,746.90 crore. This data demonstrates the tangible impact of the PLI scheme across manufacturing sectors.
According to the report, with the rollout of the fifth-generation mobile system (5G) in February, Airtel had 19,142 sites of the new technology and Reliance Jio had 82,509 sites as of March 3, 2023.
DoT said a total of 3,418 Wi-Fi hotspots were established during February, while as many as 1,47,734 Wi-Fi hotspots were established as of February 28, 2023.
Conclusion
The PLI auto scheme represents a transformative opportunity for India’s automotive sector while contributing to the nation’s clean energy goals. Understanding PLI auto eligibility, meeting investment thresholds, and strategically planning for advanced technology adoption are crucial for success. With the PLI automobile India programme offering incentives of 13-16% for OEMs and 8-11% for component manufacturers, along with additional benefits for EV and hydrogen technologies, the scheme positions India as a competitive manufacturing destination.
As the PLI scheme continues to evolve, automotive businesses must act decisively to capitalise on these Make in India auto incentives. Whether you’re an established manufacturer or a new entrant, the time to align your business strategy with PLI requirements is now. For companies seeking financial support to scale operations, exploring flexible funding options becomes essential.
Ready to accelerate your PLI journey? Lendingkart offers customised business loans for automotive manufacturers and component suppliers looking to invest in advanced technology, expand production capacity, and secure their position in India’s automotive manufacturing revolution.
Frequently Asked Questions
1. What is the PLI auto scheme, and how does it benefit manufacturers?
The PLI scheme is a government initiative offering production-linked incentives of 13-18% for OEMs and 8-13% for component manufacturers investing in advanced automotive technology. Launched in September 2021 with a ₹25,938 crore outlay, the PLI automobile programme specifically targets electric vehicles, hydrogen-fuelled vehicles, and cutting-edge components.
2. How does the PLI scheme aim to boost innovation and technology in the auto industry?
The PLI scheme for automobiles and auto components is designed to catalyze innovation by incentivizing manufacturers to invest in advanced technologies. Through financial incentives and benefits tied to production milestones, the scheme encourages R&D in electric vehicles, efficient powertrains, and cutting-edge components. This initiative aims to elevate India’s automotive sector by fostering technological advancements, enhancing competitiveness, and facilitating sustainable growth.
3. What are the eligibility criteria for auto manufacturers to benefit from the PLI scheme?
To qualify for the PLI scheme for automobiles and auto components, manufacturers must meet specific eligibility criteria set by the government. These criteria typically encompass factors such as investment thresholds, production targets, technology standards, and compliance with local regulations. Detailed guidelines outline the prerequisites, ensuring that companies committed to enhancing production, technology, and local value addition benefit from this initiative.
4. How will the PLI scheme impact the production capacity and employment opportunities in the automotive sector?
The PLI scheme for automobile and auto components is set to substantially boost production capacities and create more employment opportunities in the automotive sector. By incentivizing manufacturers, it encourages investments in technology and infrastructure, leading to increased production outputs. This surge in capacity is expected to drive job creation across various levels of the industry, supporting economic growth and innovation.
News Updated Date: 22nd May 2023
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