Auto PLI to remain in slow lane in FY26

Disbursals will stay low, despite the large amount set aside

- Manas Pimpalkhare

Four years since India flagged off an ambitious scheme to encourage the local production of automobiles, the ₹26,000-crore venture is yet to gain traction.

The production-linked incentive (PLI) scheme for automobiles and components (PLI-Auto) was announced in 2021, but the first payouts happened only in January this year. For FY26, the government expects incentives to make up only 12% of the overall ₹2,818.85 crore allotted to the scheme, showed data from the Centre's Outcome Budget, which sets targets for outcomes of various schemes. That would make it the second year the scheme's disbursements will be only a small share of the funds allocated.

The scheme, which runs till FY29, promises incentives for producing advanced automotive technology, including electric vehicles and fuel cell vehicles. However, stiff targets for revenue, investments and local value addition have made it hard for many companies to qualify for incentives.

EV makers say they are facing challenges due to policy uncertainty.