The Department for Promotion of Industry and Internal Trade (DPIIT) released detailed operational guidelines for PLI Automotive Scheme Phase-2 in late May 2026. The rules specify fresh production baselines, stricter local value-addition thresholds, and mandatory export minimums that differ markedly from Phase-1.
For tier-2 and tier-3 component makers, this reshapes eligibility and subsidy calculations—and filing deadlines begin in July.
Market signals
Phase-2 resets the FY2023–24 production baseline upward by 12% and mandates 35% export intensity (vs. 30% in Phase-1). Domestic-only or low-export component suppliers now face tighter criteria to qualify.
New rules explicitly boost incentives for electric-vehicle components and hybrid systems. Traditional ICE-only suppliers see reduced subsidy slabs unless they diversify product lines.
DPIIT has integrated GST ITC data with PLI monitors. Discrepancies between claimed local sourcing and GST invoices now trigger automatic audits and clawbacks.
Auto-component firms must file fresh PLI applications or amend existing ones by 31 July 2026 using the new baseline and export definitions. Any mismatch between declared capacity, actual GST-reported purchases, and export bills risks subsidy rejection or recovery. Vinayakam's PLI compliance team helps manufacturers map production data to new thresholds, prepare amended applications, and establish audit-ready sourcing and export documentation—critical to securing Phase-2 benefits.
Your action checklist
- Pull FY2023–24 audited production volumes; calculate the +12% Phase-2 baseline and confirm current/projected capacity can meet it and 35% export target by March 2027.
- Audit all tier-1 and tier-2 supplier invoices (GST returns) to verify local value-addition % and cross-check against PLI's EV/advanced-powertrain product eligibility list.
- Prepare and file PLI Phase-2 application or amendment by 31 July 2026; include revised production roadmap, export strategy, and HS code mapping for EVelectric components if applicable.
- Establish monthly GST-to-export reconciliation logs and maintain bills of material (BOM) attestations to demonstrate real-time local sourcing—required for audit responses and subsidy drawdown.