Gearing Up India: PLI Scheme Accelerates Auto Sector with ₹25,000 Cr Investments, Job Creation, and EV Growth

New Delhi — The Production Linked Incentive (PLI) Scheme for Automobiles and Auto Components, launched by the Union Cabinet on September 15, 2021, is driving a major transformation in India’s automotive landscape. With a robust budgetary outlay of ₹25,938 crore, the scheme is fuelling investment, boosting employment, and energizing the transition to advanced automotive technologies (AAT), especially electric vehicles (EVs).

Designed to bridge cost disadvantages and strengthen domestic manufacturing, the PLI-Auto scheme is strategically structured to encourage fresh investments in indigenous production of AAT products. This includes not only state-of-the-art vehicles but also a wide range of high-tech components.

After extensive consultations with industry stakeholders, the Ministry of Heavy Industries (MHI) notified 19 AAT vehicle categories and 103 AAT components under the scheme on November 9, 2021. These categories form the cornerstone of India’s push towards self-reliance in automotive manufacturing.

To further support the Make in India initiative, companies applying under the scheme must meet a Domestic Value Addition (DVA) threshold of 50%. This mandate is pivotal in reducing import dependence while simultaneously nurturing both domestic and global supply chains. A Standard Operating Procedure (SOP) — developed in collaboration with testing agencies — ensures a uniform, transparent, and credible process for DVA calculations.

So far, 6 Original Equipment Manufacturers (OEMs) have secured DVA certification for 66 approved vehicle variants, and 7 component manufacturers have received the certification for 22 component variants. These certifications signify compliance with stringent localization norms and a commitment to high-value manufacturing.

Massive Economic Impact

• Investments: By December 2024, the scheme has attracted over ₹25,000 crore in capital investment. Major automakers like Tata Motors and Mahindra & Mahindra are spearheading this growth with dedicated EV production facilities and technological upgrades.
• Employment: The initiative has catalyzed the creation of thousands of direct and indirect jobs across manufacturing, R&D, and supply chain functions. New EV plants are acting as economic hubs, generating localized employment opportunities.
• Sales Surge: With a surge in new EV models, sales in the electric vehicle and AAT segments have witnessed notable upticks. Consumers are responding positively to the broader range of high-quality, domestically produced vehicles.
• Disbursement Milestone: FY 2023–24 marked the first performance year for the scheme. In FY 2024–25, incentives totaling ₹322 crore were disbursed — a strong start, with more disbursements expected as companies scale production.

The PLI-Auto scheme stands as a pillar of India’s ambition to become a global automotive manufacturing powerhouse. It is not only steering the industry toward technological self-reliance but also aligning with sustainability goals through electric mobility and clean tech innovation.

With continuous policy responsiveness and an ecosystem approach, the scheme is expected to further integrate Indian manufacturers into global supply chains and position India as a competitive hub for automotive excellence.