Production Linked Incentive (PLI) Scheme for India’s Auto Industry and Drone Industry – Major Boost for Investments & Manufacturing in India

On 15 September 2021, through a press release, the Government of India announced the approval of a PLI Scheme for the automobile industry and drone industry with a budget of INR 260 Billion (Approx. USD 3.5 Billion). Following such approval, the Ministry of Heavy Industries (MHI) vide gazetted notification dated 23 September 2021 published the PLI Scheme along with guidelines for automobile and auto component industry.

Further, as a follow up to the liberalised Drone Rules, 2021 released by the Central Government on 25 August 2021, and the Geospatial Data Guidelines issued on 15 February 2021, the Ministry of Civil Aviation (MoCA) issued two press releases on:

  1. 15 September 2021 setting out the highlights of PLI Scheme for drone and drones components; and
  2. 24 September 2021 releasing India’s airspace map for drone operations.

The decision comes in furtherance of the PLI Schemes announced earlier during the Union Budget 2021-2022 for 13 sectors with an overall outlay of INR 1.97 Trillion (Approx. USD 26 Billion).

Set out below are the brief highlights of the relevant PLI Scheme and press release:

For the automobile sector

  • The scheme aims to bolster India’s presence in the global automotive market by incentivising emergence of advanced automotive technology (AAT) products and encouraging investments in automotive manufacturing value chain as well as indigenous global supply chain for AAT products.
  • The scheme also promotes production of electric/hydrogen fuel cell automobile of all segments.
  • The scheme is open to existing automotive and auto component manufacturing companies and their group companies as well as new non-automotive investor and its group companies.
  • The scheme has two components, both sales value linked:
  1. the Champion [Original Equipment Manufacturers (OEM)] Incentive Scheme, applicable to eligible battery electric vehicles and hydrogen fuel cell vehicles of all segments; and
  2. the Component Champion Incentive Scheme, applicable to eligible AAT components of vehicles, completely knocked down/ semi knocked down kits, vehicle aggregates of 2-wheelers, 3-wheelers, passenger vehicles, commercial vehicles and tractors etc.
  • In conjunction with the existing PLI scheme for Advanced Chemistry Cell (ACC) and Faster Adaption of Manufacturing of Electric Vehicles (FAME), the present scheme aims to catapult the industry from a traditional fossil fuel-based automobile transportation system to a sustainable, and efficient electric vehicle based system.
  • Over a period of 5 years, the scheme intends to lead to fresh investments of over INR 425 Billion (Approx. USD 5.7 Billion), incremental production of over INR 2.3 Trillion (Approx. USD 31 Billion) and creation of over 750,000 jobs.

For the drone sector

  • The PLI Scheme for the drone and drone components industry is intended to boost capacity for the sector and generate investments worth INR 50 Billion (Approx. USD 674 Million), increase eligible sales by INR 15 Billion (Approx. USD 203 Million) and add approximately 10,000 jobs over a period of 3 years.

A copy of the Scheme, guidelines and press release can be accessed at: