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Extension of PLI Scheme for Automobile and Auto Components


The Ministry of Heavy Industries has extended the tenure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year. The incentives will now be applicable for five consecutive financial years, commencing from 2023-24. The decision, approved by the Empowered Group of Secretaries (EGoS), outlines that companies failing to meet the sales increase threshold in the first year will not receive incentives for that specific year. Nevertheless, these companies remain eligible for future benefits by achieving a 10% year-on-year growth over the initial year’s threshold.


GS III: Indian Economy

Dimensions of the Article:

  1. Production Linked Incentive Scheme in India
  2. Status of the Automobile Sector in India

Production Linked Incentive Scheme in India

  • The Production Linked Incentive (PLI) scheme is a government initiative in India designed to provide financial incentives to companies based on their incremental sales of domestically manufactured products.
  • The scheme’s primary objectives include promoting domestic manufacturing, fostering job creation, boosting exports, facilitating technology transfer, and reducing dependence on imports.
Key Features:


  • The PLI scheme is currently operational in 14 crucial sectors, encompassing mobile manufacturing, medical devices, automobiles and auto components, pharmaceuticals, specialty steel, telecom & networking products, electronic products, white goods (ACs and LEDs), food products, textile products, solar PV modules, advanced chemistry cell (ACC) battery, and drones and drone components.

Incentive Rate:

  • The incentive rate varies across sectors and product categories, ranging from 4% to 6% of incremental sales.

Status of the Automobile Sector in India

  • India holds the position of the world’s third-largest automobile market, contributing to 5.41% of the total FDI inflow according to the September 2023 DPIIT Report.
  • The Electric Vehicle (EV) market is anticipated to witness a compound annual growth rate (CAGR) of 49% between 2022-2030, with the EV industry expected to create 5 million direct and indirect jobs by 2030.

February 2024