Why is it in the News?

Recently, the Ministry of Heavy Industries announced the extension of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year with "partial amendments".

PLI Scheme for Automobile Sector:

• The Union Cabinet approved the PLI-Auto Scheme in 2021, allocating a budgetary outlay of Rs. 25,938 crore for five years (FY2022-23 to FY2026-27).
• Aimed at enhancing the production of Advanced Automotive Technology (AAT) Products, the PLI-AUTO Scheme is designed to promote extensive localisation for AAT products and facilitate the development of both domestic and global supply chains.
• This scheme primarily targets Zero Emission Vehicles (ZEVs), specifically Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles.
• In a recent amendment, the incentive period was extended to cover five consecutive financial years, commencing from the financial year 2023-24, with disbursement scheduled for the subsequent financial year, 2024-25.
• The amended scheme stipulates that approved applicants can avail benefits for five consecutive financial years, but the eligibility period will not extend beyond the financial year ending on March 31, 2028.
• Additionally, the amendments specify that if an approved company fails to meet the determined threshold for an increase in Determined Sales Value over the initial year's threshold, it will not receive any incentives for that particular year.

What is the Production-Linked Incentive (PLI) Programme?

• Around 5 years ago, the Indian government aimed to stimulate domestic manufacturing by encouraging more companies to produce goods.
• Recognizing manufacturing as a crucial driver of economic growth with a multiplier effect, wherein each job and investment in manufacturing positively influences other sectors, the government introduced the Production-Linked Incentive (PLI) scheme.
• Under the PLI scheme, both foreign and domestic companies engaged in manufacturing receive financial incentives from the government.
• The annual incentive payout is determined as a percentage of the revenue generated by these companies and is applicable for a period of up to five years.