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Auto PLI Scheme Misses EV Targets, Experts Criticize Startup Exclusion
India's main Auto Production Linked Incentive (PLI) scheme, with its ₹25,938 crore budget, is not meeting its targets for domestic manufacturing and local parts. Experts and manufacturers say the strict entry rules, especially the high revenue requirements, are why it's not working well. This setup unfairly blocks innovative startups leading India's electric vehicle (EV) push.
The program was meant to boost production of EVs, batteries, and other high-tech auto parts. But even after attracting over ₹35,600 crore in investment, companies are having trouble meeting local sourcing rules and production levels to get the incentives. A recent report from a parliamentary committee agreed, recommending the Ministry of Heavy Industries (MHI) re-examine the rules to stop excluding local startups.
Startups Lead EV Innovation, Need Policy Support
Industry leaders say it's wrong to think startups don't have large-scale manufacturing abilities anymore. EV-focused startups are now key players, boosting production, sales, and vital R&D. Dinesh Arjun, CEO of EV motorcycle startup Raptee.HV, pointed out that the original scheme might have missed how the EV market is changing, perhaps grouping real tech firms with simpler assemblers.
Rakesh Kumar Ray, Manager at APL for ICE & EV Powertrain Development, stressed that policies should value innovation and market success more than just company size. He noted that the EV shift has been strongly driven by early commitment and creating new market categories, often led by startups. Punishing these innovators could slow down the progress the PLI scheme aims for.
Economic Disadvantage for EV Startups
The current policy rules, based on total revenue and size, don't recognize that new EV areas like electric motorcycles are still developing. Startups leading these areas, even with big market shares, can't reach the PLI's high number targets. This exclusion creates a significant 13-16% price disadvantage against older companies that get incentives. Saurav Kumar, CEO of Euler Motors, called this a possible "life or death" issue for startups.
Tarun Mehta, CEO of Ather Energy, noted that startups are already spending a lot on building manufacturing facilities, which is exactly what the PLI scheme wanted. Thiru Srinivasan, CEO of CAAR, Advanced Automotive Technologies, believes that supporting startups financially would help them innovate faster and speed up EV adoption. This is different from bigger companies that might move slower to protect their current business. By March 2026, the scheme had only paid out ₹2,321 crore, a small part of the total funds, showing a strong need to adjust the policy.