Centre may nearly double auto PLI outlay to ₹5,500 crore in FY27, but application window unlikely to reopen

A proposal to this effect has been submitted by the heavy industries ministry to the finance ministry for the PLI scheme that has a ₹25,938 crore outlay over five years (FY25-29), and consultations are underway for the same, the people cited above said.

“The scheme’s outlay is expected to be around ₹5,500 crore for FY27," said one of the two people cited above, requesting anonymity.

Notified in 2021, the PLI-Auto scheme aims to boost domestic manufacturing of advanced automotive technologies and position India as a global electric vehicle hub. Over 80 companies were shortlisted as ‘Champion OEMs’ (original equipment manufacturers) and ‘Component Champions’ in early 2022. Of these shortlisted companies, eight vehicle manufacturers and 10 component makers have products qualified for PLIs, according to the PLI Auto portal.

The scheme has so far attracted investments of ₹35,000 crore, which has translated into 278 manufacturing units and nearly 49,000 jobs. Of the ₹2.315 trillion sales target under the scheme for March 2028, ₹32,879 crore had been achieved till 30 September.

Call for reopening PLI window

In a related development, the heavy industry ministry is unlikely to agree to reopen the application window under the ₹25,938-crore scheme despite new-age deep-tech automakers demanding for it. EV makers Ather Energy, Euler Motors and River Mobility have written to heavy industries minister H.D. Kumaraswamy and sought reopening of the window that would enable them to seek manufacturing sops for zero-emission vehicles under the scheme, according to a letter dated 10 December, which was reviewed by Mint.

Their request is unlikely to go through, given that the procedure to amend the scheme requires the union cabinet’s approval.
“We have received a proposal from these companies to reopen the PLI window, but that is not going to move ahead. Making changes to the PLI scheme now is a long process, it requires cabinet approval," said a senior government official, one of the two people cited above.
These companies have argued that they were not eligible for these incentives when the scheme was launched in 2021, and have since become eligible. They have pitched that reopening of the window will bring in investments in EV manufacturing, deepen value-addition in critical components, and create jobs amid the energy transition in the auto sector.
Ather Energy, Euler Motors and River Mobility have invested substantially in research and development and have indigenized production.

“Our vehicles are fully indigenous and proudly eligible under various government schemes, reflecting our highest standards of localization, safety and product quality," the letter said, adding that the scheme’s eligibility criteria did not allow these “young, rapidly scaling deep-tech companies" to be eligible.
The PLI scheme has aided established automakers, but its existing framework has “created an unintended structural imbalance", the letter said.

The eligibility criteria calls for existing automakers to have a minimum revenue of ₹10,000 crore, and new non-automotive companies (those that have not sold vehicles before FY21) to have a minimum global net worth of ₹1,000 crore.
“This absence of PLI places us at an estimated 13-16% cost disadvantage relative to many peers that currently benefit from the scheme," the companies said in the letter, stating that it hinders them from making EVs more affordable to consumers.
As per the scheme guidelines, disbursals to automakers were to increase every year, but they have missed targets.

In its first year (FY25), the government disbursed ₹322 crore to four companies—Tata Motors, Mahindra & Mahindra, Ola Electric and Toyota Kirloskar Auto Parts—as against ₹604 crore earmarked for the year. By the second year, as on 30 November 2025, the government had disbursed a total of ₹1,350.83 crore to five applicants, which implies a disbursement of around ₹1,000 crore in this fiscal so far, as against the ₹3,150 crore earmarked for the entire FY26.

Disbursements have remained low due to the PLI scheme's strict localization mandate, which calls for 50% domestic value-addition, and high bars of revenue, which excludes newcomers.

Mint had earlier reported about the heavy industries ministry looking to revise its budget for FY26 from ₹2,800 crore to a more realistic ₹2,000 crore. Minister Kumaraswamy had told Mint in an interview in June that the scheme’s disbursal in FY26 would be about ₹2,000 crore, with nine companies claiming sops.
For the third, fourth and fifth year (FY27-29) ₹5,925 crore, ₹7,199 crore and ₹9,060 crore has been earmarked as per the scheme guidelines.
Queries emailed to the spokespersons of the heavy industries ministry, Ather Energy, Euler Motors, and River Mobility on 22 December remained unanswered till press time. Queries emailed to the spokespersons of the finance ministry, Society of Indian Automobile Manufacturers, Tata Motors, M&M, Ola Electric, Bajaj Auto, Hero MotoCorp, TVS Motor Co, Maruti Suzuki on 23 December also remained unanswered.

Experts say a hike in allocation under the scheme reflects a structural shift in one of the world's top automobile markets.
“The increase in the PLI Auto outlay signals policy continuity, confirming the government's commitment to sustaining momentum in automotive manufacturing, particularly in advanced technologies and EVs," said Crisil Ratings director Poonam Upadhyay.
“By providing longer-term visibility for original equipment manufacturers and suppliers, it enables them to plan investments in capacity, technology, and localization. This move reflects a structural shift aimed at strengthening domestic manufacturing capabilities and enhancing global competitiveness," Upadhyay said.
The proposed higher allocation comes at a time when EV sales in the country rose to 2 million units in 2025, as per government’s Vahan registry, compared with 1.9 million units in 2024. About 8% of the 27.4 million new vehicles sold in India in 2025 were electric, compared with 7.4% in the previous year, according to Mint’s calculations based on Vahan data.

Job creation in tech transition

India’s auto sector energy transition has seen rapid scaling up, with the EV sector poised to rise in value. Market intelligence firm Mordor Intelligence said this market is currently valued at about $55 billion, and will nearly double by 2029.

Experts are of the view that the shift towards cleaner technologies will continue to create jobs, one of the aims of the PLI scheme.

“When the auto sector was complying with various new emission requirements over the past few decades, workmen as well as aftermarket suppliers and roadside mechanics were at risk. But the industry has always adapted by upskilling these people," he said.

“When the auto sector was complying with various new emission requirements over the past few decades, workmen as well as aftermarket suppliers and roadside mechanics were at risk. But the industry has always adapted by upskilling these people," said I.V. Rao, an auto industry veteran and a distinguished fellow for transport and urban governance at The Energy and Resources Institute (Teri).

Upadhyay of Crisil Ratings echoed the sentiment on upskilling, explaining that the employment growth in the energy transition is increasingly skewed toward higher-skill profiles, “highlighting the need for reskilling, upskilling, and capability development".

“While additional supply-side incentives can support job creation, their effectiveness is likely to depend on factors such as the extent of localisation, scale of manufacturing, and development of the supplier ecosystem, rather than incentives alone. Consequently, job creation is more closely tied to sustained production volumes and a well-developed manufacturing ecosystem," she said.