Govt. announces Rs. 26,000 crore PLI scheme for auto sector

The PLI scheme is expected to bring in fresh investments of over Rs. 42,500 crore over the next 5 years.

The Government of India has approved a production-linked incentive (PLI) scheme for the auto sector.

The Rs. 25,938 crore scheme is aimed to provide a boost to domestic manufacturing, including that of electric and hydrogen fuel cell vehicles. The scheme also aims to incentivize advanced technologies like adaptive lighting, automatic braking, tyre pressure monitoring system and collision warning systems.

The government estimates that over the next 5 years, the PLI scheme will bring in fresh investments of over Rs. 42,500 crore. It is expected to lead to an incremental production of over Rs. 2.3 trillion and would create over 7.5 lakh new jobs.

The government also expects the existing Rs. 18,100 crore scheme for advanced chemistry cells and the Rs. 10,000 crore FAME scheme to help us transition from fossil fuel-based vehicles to sustainable tech like EVs quickly.

The PLI scheme is divided into two components - Champion OEM Incentive Scheme and Component Champion Incentive Scheme. While the fund allocation for the auto sector is 50% less than what was initially planned (Rs. 57,000 crores), the move has received a positive response from all sections of the industry.