Auto PLI scheme to see low interest in FY26 amid tough qualification norms, EV policy uncertainty

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26 Aug, 2025 12:21

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The production-linked incentive (PLI) scheme for automobiles and auto components is expected to continue seeing muted response in the upcoming financial year (FY26), as per data of the Outcome Budget 2025-2026.

The government had announced the PLI Auto scheme in 2021. The first round of payouts under the scheme were made in January 2025. Leading automotive companies Mahindra & Mahindra and Tata Motors received incentives worth nearly Rs 246 crore for FY24, as claimed under the PLI scheme.

The government expects incentives to stand at Rs 336.77 crore in FY26. This makes up only a small portion of the overall Rs 2,818.85 crore allotted to the scheme, data showed.

The PLI Auto scheme, which is applicable till FY29, aims to attract fresh investments by promising incentives for producing advanced automotive technology. However, the difficult targets for revenue and investments make it difficult for several companies to apply for the scheme. Additionally, EV-makers face challenges over policy uncertainty, Mint reported.

Also read: HSBC flags concerns over likely EV policy changes, sees disadvantage for Indian automakers

Despite the scheme's motive of increasing production and sales, the companies find it difficult to meet the PLI targets amid challenges such as supply chain disruptions, regulatory delays, and cautious investment due to frequent changes in fiscal EV policies, Mint quoted Alok Rai, Director of Public Affairs at Society of Manufactures of Electric Vehicles, an industry body.

"A key flow in the scheme is its restrictive qualification norms, limiting participation to certain companies. This exclusion, combined with policy uncertainties, slows sales growth and delays PLI compliance," he added.