The PLI scheme will generate as many as 7.5 lakh jobs for the auto sector, as per government estimates.
Ashok Leyland led the gains while Balkrishna Industries, Hero MotoCorp and Tata Motors were also bullish.
At around 2.55 pm, Nifty Auto was trading at 10,264.95 up 55.35 points or 0.54%, touching a high of 10,284.45 and low of 10,222.95 during intraday trade on Wednesday.
Nifty50 and Sensex -- hit fresh record high levels in intra-day deals. BSE Sensex was trading at day's high of 58,745.65 up 498.56 points or 0.86% and Nifty 50 at new high of 17,521.60 up 141.60 points or 0.81%.
Ashok Leyland rose 2.36% at Rs127.80 per piece to lead the gaining race. Balkrishna Industries gained 1.2% at Rs2,501.60 per piece. Hero MotoCorp rose 0.9% at Rs2,851.70 per piece. Tata Motors was also nearly 0.9% higher at Rs308.80 per piece.
Tube Investments of India, Bajaj Auto and Amara Raja Batteries also advanced over 0.7%. M&M, Bharat Forge and Eicher Motors also traded higher.
MRF, Exide India and Maruti were marginally higher, while TVS Motor Company and Bosch traded in the red.