Government Considering ₹13,000-Crore Boost for Local Auto Parts Production

The Indian government is working on a new ₹13,000 crore incentive scheme for auto component manufacturers. The plan is aimed at reducing import dependence and boosting local production. It is separate from the existing production-linked incentive (PLI) scheme, as per news reports.

A detailed proposal has been submitted to the Prime Minister’s Office. Officials from the Ministry of Heavy Industries and NITI Aayog were present during the presentation. The scheme is being finalised by the Ministry of Heavy Industries.

Based on the NITI Aayog Report

The plan draws from a report released by NITI Aayog in April 2025, titled “Automotive Industry: Powering India’s Participation in Global Value Chains.” The report outlines steps needed to increase India’s role in global auto component supply.

Read more: India’s Auto Parts Market Set to Hit $145 Billion by 2030: NITI Aayog!

Fiscal Incentive Structure

Under the proposed scheme, 4 components of fiscal support are being considered. First, operational expenditure (Opex) supports scaling manufacturing and invests in tooling and infrastructure. 2nd, incentives for skill development to build a trained workforce.

3rd, funding support for R&D, international branding, and intellectual property transfer to help MSMEs grow. 4th, support for cluster development to create shared R&D and testing facilities.

Non-Fiscal Interventions Also Planned

In addition to financial support, the scheme may include 3 non-fiscal measures. These include the adoption of Industry 4.0 technologies to modernise manufacturing, international collaboration through joint ventures and FTAs, and regulatory reforms to improve ease of doing business.

The objective of this proposal is to raise India’s share in the global auto component value chain from the current 3% to 8% by 2030. The scheme is intended to cover gaps in capacity, efficiency, and scale within the domestic industry.

Conclusion

If approved, the ₹13,000-crore plan will be implemented alongside existing policies, targeting the full supply chain from manufacturing to exports, without overlapping with current incentives.

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