Boosting auto industry growth: India’s PLI regime expands with strategic amendments
In an effort to strengthen the automobile and auto parts sector, the Ministry of Heavy Industries recently announced the extension of the Production Linked Incentive (PLI) scheme for cars and auto parts for another year. The decision, approved by the Empowered Group of Secretaries (EGoS), comes with strategic amendments aimed at increasing clarity and flexibility within the plan.
A Gazette notification published by the Department outlines the key changes to the PLI scheme and will be effective immediately upon publication. Under the revised framework, the incentives will be for five consecutive financial years starting from 2023-24 and payments will be made in the next financial year, 2024-25. Specifically, approved applicants will be eligible to receive benefits for up to five consecutive fiscal years, through the fiscal year ending March 31, 2028.
An important addition to the revised regime addresses the performance criteria for companies seeking incentives. If an approved company does not meet the criteria for increased firm sales compared to the first year, it will not receive an incentive for that particular year. However, a company may continue to be eligible for benefits in subsequent years if it achieves a threshold calculated based on 10% year-over-year growth over the first year’s threshold. This provision is intended to ensure fairness among approved companies and protect companies that choose to bring forward their investments.
The amendments also include amendments to the incentive expenditure table, and the total amount of incentives is substantial. 25,938 billion. This financial boost is expected to provide a major impetus to companies operating in the auto and auto parts sectors.
By expanding the PLI scheme and introducing these amendments, the Ministry of Heavy Industry aims to provide clarity and support to the sector and foster growth and competitiveness. This move is in line with the government’s commitment to foster a thriving and vibrant automobile industry in India. As the automotive industry landscape continues to evolve, these strategic measures are poised to contribute to the sector’s resilience, drive innovation and ensure a solid future for India’s automotive and auto parts industry. .