Today’s interim budget marks a significant boost for OEMs and component manufacturers, with an allocation of Rs 3,500 crore towards the production-linked incentive scheme for automobiles and components in the upcoming financial year. The disbursement of incentives under this scheme is scheduled to commence in 2024-25.
In 2021, the government sanctioned an output-linked incentive scheme with a budget of Rs 25,938 crore over five years to enhance domestic manufacturing of advanced automotive technology products and attract investments across the automotive manufacturing value chain. Initially applicable from the financial year 2022-2023 until 2026-2027, the scheme’s duration was recently extended by one year until March 31, 2028.
The scheme comprises two components: the Champion OEM incentive scheme for battery electric and hydrogen fuel cell vehicles, and the Component Champion incentive scheme for high-tech and high-value components. Incentives are granted for products with a minimum domestic value addition of 50%.
The government has greenlit 18 companies, including Maruti Suzuki, Tata Motors, Hero MotoCorp, Bajaj Auto, and Ola Electric, under the Champion OEM category, and 67 companies under the Component Champion category. Incentive disbursement is set to commence in the financial year 2024-2025.
Automakers such as Tata Motors and Mahindra & Mahindra have obtained domestic value certificates, and recently, ARAI awarded Tata Motors the first PLI-AUTO certificate in the M3 and N1 category.
As per budget documents, the revised estimate for the allocation of the PLI Auto scheme in the current financial year is Rs 484 crore. The complete budget for the next financial year will be unveiled in July after the formation of the new government following the Lok Sabha elections.