India expands PLI scheme for auto industry: boosting growth and competitiveness
In a major boost to India’s automobile sector, the Union Ministry of Heavy Industries has announced a one-year extension of the Performance-Linked Incentive (PLI) scheme for the automobile and auto component industries. The extension of this incentive is now for five consecutive fiscal years from FY24 to FY28 and is scheduled to strengthen domestic manufacturing, attract investment and promote the ‘Make in India’ initiative.
Revised PLI scheme: a boon for the automotive industry
The total expenditure under the scheme increased to Rs 25,938 crore, with a significant increase in investment aimed at fostering growth, competitiveness and innovation in the sector. The PLI scheme was originally scheduled to run from 2023 to 2027, but has now been extended to 2028 and incentive payments are scheduled to start in 2024-25. This decision was approved with the concurrence of the Empowered Secretariat Group, demonstrating the Government’s determination to support this important industry.
Modifications to improve effectiveness
Along with the extension, the ministry made some revisions to improve the effectiveness of the system. One such amendment provides that companies that do not meet the criteria for increased firm sales will not receive incentives for the year. However, if you achieve 10% year-over-year growth over the first-year threshold, you will remain eligible for benefits the following year. The conditions are intended to level the playing field for all approved companies and protect those that have brought forward their investments.
A step towards a sustainable future
The expanded PLI scheme goes beyond financial incentives and represents a strategic shift towards a more sustainable and technologically advanced future. This is expected to boost the manufacturing of electric and hydrogen fuel cell vehicles and demonstrate India’s commitment to environmental sustainability. The scheme is expected to attract investments of over Rs 42,500 crore and create employment opportunities for over 750,000 individuals, thereby contributing to the overall economic growth of the country.
In conclusion, the extension and amendment of the PLI regime underlines the Government of India’s efforts to foster growth and innovation in the automotive industry. These measures are expected to significantly increase the competitiveness of the sector globally by providing greater clarity and support.