The Centre expects payouts under its ₹25,938 crore production-linked incentive scheme for automobiles and auto components (PLI Auto) to more than double in FY27, as the scheme moves into a more mature phase.
The ministry of heavy industries estimates it will disburse about ₹4,700 crore in the current fiscal, of which roughly ₹800 crore has already been paid, according to two government officials aware of the matter. This follows disbursements of ₹246 crore in FY25 and ₹2,000 crore in FY26.
The projected increase comes even as the scheme remains below its original payout trajectory. While 82 companies were shortlisted as ‘Champion OEMs’ (original equipment manufacturers) and ‘Component Champions’ in early 2022, only eight vehicle manufacturers and 10 component makers currently have products that qualify for incentives, according to the PLI Auto portal.
Mint explains why payouts are expected to rise, how they compare with the scheme’s original targets, and what the slow rollout says about the scheme’s implementation.
Is the disbursal under PLI Auto expected to rise in FY27?
The ministry of heavy industries expects to disburse ₹4,700 crore in FY27 under PLI Auto, the Centre’s biggest supply-side incentive scheme for clean mobility, according to two government officials aware of the matter.
The incentives will be paid to manufacturers of advanced automotive technology, including zero-emission vehicles and their components, for incremental sales in the previous fiscal.
Experts said the sharp increase in payouts reflects the scheme reaching maturity and stronger auto sales in FY26.
“The disbursement of Auto PLI has more than doubled in the last two years due to two counts: one, the scheme has reached its maturation stage and the impact is more visible; and second, that last year auto sales hit record numbers,” said Amit Bhatt, India managing director of global think tank International Council on Clean Transportation.
India’s auto market is expected to see moderate volume growth in FY27, with passenger vehicles (PVs) growing 4–6%, two-wheelers (2Ws) 3–5% and commercial vehicles (CVs) 4–6%, according to the July outlook by credit rating agency Icra Ltd.
This follows estimated FY26 growth of 7.8% for PVs, 9% for 2Ws and 12.6% for CVs, which was supported by cuts in the goods and services tax (GST) in September 2025 that moved many two-wheeler and passenger car models from the 28% to the 18% slab.
Is the increase in incentives in line with the scheme’s goals?
The Centre’s FY27 Outcome Budget targets ₹5,922 crore in PLI Auto incentive disbursals, against an allocation of ₹5,939 crore. That is broadly in line with the scheme’s original third-year payout target of ₹5,925 crore, but the ministry’s current ₹4,700-crore estimate is still 21% lower than the target.
Under the original incentive disbursal plan, the government was to pay ₹604 crore in FY25 and ₹3,150 crore in FY26. Actual disbursements were much lower, at ₹246 crore in FY25 and ₹2,000 crore in FY26.
How many companies get incentives under PLI Auto—and for how long?
The PLI Auto scheme received the Union cabinet’s approval in 2021 and provides incentives for five years, from FY25 to FY29.
Although 82 companies were shortlisted as ‘Champion OEMs’ and ‘Component Champions’ in early 2022, only eight vehicle manufacturers and 10 component makers currently have products qualified for incentives, according to the PLI Auto portal. Automakers and component makers must meet stringent domestic value-addition requirements, which have proved challenging for many of the shortlisted companies.
The scheme links incentives to incremental sales of eligible advanced automotive technology products, including zero-emission vehicles and components.
Have any concerns been raised about the scheme?
The 6 August report of the Rajya Sabha department-related standing committee on industry said the ministry had to revise its FY26 disbursal plan lower—from ₹2,800 crore to ₹2,000 crore—because fewer-than-estimated beneficiaries claimed incentives and their actual sales were lower than projected.
Nine of the 18 beneficiaries claimed incentives in FY26, against the 11 expected, the parliamentary panel report said.
The 6 August parliamentary panel report, as well as a March report by the same panel, raised concerns about the ministry of heavy industries significantly reducing budget allocations for PLI Auto in the last two fiscals, describing the pattern as highly volatile.
According to data provided by the ministry to the parliamentary panel, the ₹2,818-crore budget allocation for PLI Auto in FY26 was revised downward by 26% to ₹2,000 crore, before the allocation was raised sharply to ₹5,939 crore in the FY27 budget estimates.
“There will always be a difference in projected utilization versus actual disbursement, as auto sales are directly linked to economic issues, which in turn are linked to multiple factors, including geopolitical issues,” said Bhatt of ICCT.