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A boost in the EV industry with the new PLI scheme
Varnika Jain
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Published on 4th Oct 21

A boost in the EV industry with the new PLI scheme

On Friday, the union cabinet minister approved the PLI scheme( Production-Linked Incentives). The main motive of this initiative is bringing advancement in technology, which mainly aims at bringing advancement in the electric vehicle battery manufacturing technology. The scheme offers an incentive of 26,058 crores over a period of 5 years.

Many EV manufacturers have shown interest in this scheme and would be highly likely to contribute.

How will this scheme work?

The PLI scheme or production-linked incentive provided the impetus to the companies in order to boost domestic manufacturing. The basic motive behind this introduction is to make India less reliable on imports and to make products more compatible with price.

Criteria of the scheme

The first case is the transportation of Global revenue from an OEM of Rs. 10,000 crore and for 500 crores auto-component manufacturing. Additionally, the company should also have an investment of 3,000 crores in assets in OEM and 150 crores for auto-component manufacturers. The amount of 26,058 does not include internal combustion, LPG, and CNG.

The subsidiary is percentage-based with the government providing 18% incentives. This benefit can be availed along with the FAME scheme so that technological advancement can be enhanced in the EV sector.

Benefits to the EV sector

The scheme is focused on hydrogen fuel vehicles and EV vehicles. It’s divided into two separate schemes.

1. Champion OEM Incentive scheme.

2. Champion component Incentive scheme.

Components mainly compromise hydrogen fuel components, flex-fuel kits, high voltage connectors and connectors and cables, AC and DC charging inlet and outlet ports, electric motor components, electric compressor among the 22 products specified.

This scheme provides direct fiscal incentives for brands and indirect incentives for investments. The government aims at bringing an investment of 42,500 crores. The PLI scheme is likely to occupy most of the market share for the duration. The scheme will create more employment opportunities in EV, fuel manufacturing, and component space. More opportunities will be created for administrative and manufacturing units looking for EV future.


Although the scheme brings many opportunities to the EV sector still it does not bring benefits to the small and medium manufacturing units. It would be difficult for those manufacturers who have flickering EV startups to avail this opportunity within the given time frame. This is the first time that such a scheme has been brought keeping in mind the supply chain. The other schemes were focused on the sales promotion of EVs in India. PLI scheme will encourage Tesla in India. Lately, the company was worried about the tax parameter in India. With rapid supply and incentives, this scheme brings a bright EV future in India.  

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