M&M, Tata Motors First OEMs To Win Incentives Under Auto PLI Scheme

Mahindra & Mahindra Ltd. and Tata Motors Ltd. have become India's first automakers to receive production incentives for manufacturing electric vehicles.

The Union Ministry of Heavy Industries has approved a total disbursal of Rs 246 crore to the automakers under the production-linked incentive scheme for manufacturing of advanced automotive technology in India, according to a statement released on Thursday. 

Tata Motors claimed Rs 142.13 crore and M&M sought Rs 104.08 crore, against eligible sales of Rs 1,380.24 crore and Rs 836.02 crore, respectively, according to the statement. Tata Motors' Tiago EV, Starbus EV and Ace EV qualified for the incentives, as did M&M's electric three-wheelers Treo, Treo Zor and Zor Grand.

“The total claims from these applicants amount to approximately Rs 246 crore, which have been examined and recommended by the project management agency and subsequently approved by the Ministry of Heavy Industries,” a ministry official said. “Union Minister HD Kumaraswamy has expressed satisfaction with the progress made by original equipment manufacturers towards achieving localised manufacturing…”

The Heavy Industries Ministry is the nodal authority for Auto PLI Scheme.

Approved in September 2021, the Rs 25,938-crore scheme is effective from fiscal 2024 to fisal 2028, with disbursal of incentives scheduled for fiscal 2025 to fiscal 2029. OEMs have to ensure 50% localisation of their EVs to qualify for incentives. The local manufacturing of components related to electric vehicles and hydrogen fuel cells get an incentive of 13-18% while other AAT products receive 8-13%.

As of September 2024, the scheme has brought in Rs 20,715 crore in new investment and Rs 10,472 crore in incremental sales. The first disbursals are likely to start in FY25.

“The Government of India is committed to the ‘Make in India' initiative and ‘Atmanirbhar Bharat', aligning with the vision of Prime Minister Narendra Modi,” Kumaraswamy was quoted as saying in the statement. “The PLI Auto scheme, and others like PM E-Drive, PLI Advanced Chemistry Cell, etc., are expected to not only boost local manufacturing but also enhance India's competitiveness in the global automotive market.”

On Thursday, shares of M&M and Tata Motors rose 4.20% and 2.10% on the BSE, respectively, while the benchmark Sensex ended the day 1.83% higher.