Union Cabinet Approves ₹25,938 Crore PLI Scheme for Auto Sector Amid Global Trade Shifts

The Union Cabinet on Thursday approved a budgetary outlay of ₹25,938 crore for the Production Linked Incentive (PLI) scheme aimed at bolstering domestic manufacturing in the automobile and auto components sector. The initiative seeks to address cost-related challenges faced by the industry while fostering the production of Advanced Automotive Technology (AAT) products in India, the government stated in an official release. Additionally, Toyota Kirloskar Auto Parts becomes the first component maker to get Auto PLI. 

Also Read: Ola Electric To Get ₹73.7 Crore Under PLI-Auto Scheme

The approval comes at a time of increasing global trade tensions, following an announcement by U.S. President Donald Trump on Wednesday regarding a 25% tariff on auto imports, set to take effect from April 2. The move has raised concerns over supply chain disruptions and potential impacts on international automobile trade.

Launched with the intent of driving fresh investments in indigenous manufacturing, the PLI-Auto Scheme aims to strengthen India’s automotive industry by reducing import dependence and enhancing technological advancements. The initiative is also expected to stimulate job creation across various sectors, including manufacturing, supply chain management, and research and development.

Also Read: Budget 2024: Auto Industry Lauds PLI Boost, Awaits Clarity On FAME III

Following extensive consultations with industry stakeholders, the Ministry of Heavy Industries, in November 2021, identified 19 categories of AAT vehicles and 103 AAT components eligible for benefits under the scheme. These categories encompass innovations in electric mobility, hydrogen fuel cell technology, and other sustainable automotive solutions.

The financial year 2024 marked the first performance year of the PLI-Auto Scheme, with an aggregate disbursement of ₹322 crore made as of fiscal 2025, according to official data. Furthermore, as of December 2024, companies participating in the scheme have committed over ₹25,000 crore in capital investments. These investments include the establishment of new production facilities, as well as technological enhancements, with a particular focus on the electric vehicle (EV) segment.

Also Read: Smartphone Makers Push For Extending PLI Incentives In India

Leading domestic automakers such as Tata Motors and Mahindra & Mahindra have announced significant investments in expanding their EV production capabilities. These developments align with India’s broader push toward clean energy transition and sustainable mobility solutions.