India's ₹26,000 crore Production-Linked Incentives scheme for automotive manufacturing, launched in 2021 to seed a domestic electric vehicle industry, has drawn only ₹500 crore in claims from four companies in its first full fiscal year — a quiet opening that reveals less about the scheme's ambition than about the long gestation of industrial transformation. The gap between enrollment and execution is not unusual when a nation attempts to rewire its manufacturing DNA; localization mandates and compliance burdens are the friction of building something durable. Those closest to the process expec
India's ₹26,000 crore auto PLI scheme off to modest start with ₹500 crore claims
The scheme is only now beginning to find its footing
Mark
So four companies filed claims in the first year, and they only asked for ₹500 crore out of ₹26,000 crore available. That sounds like the scheme isn't working.
Mimi
It's not that simple. The companies that could file claims in year one were mostly electric two and three-wheelers—simpler products with faster production cycles. The bigger players, like passenger car makers, are still getting their electric models certified and ramping up manufacturing.
Luke
But we should be careful here. The source says "four companies" submitted claims, but it doesn't say those were the only four eligible. Were there others who could have filed but didn't? That's an important distinction.
Mimi
Fair point. What we know is that Tata and Mahindra Last Mile each claimed around ₹100 crore, and two others filed as well. The real story is that the scheme was designed for a five-year horizon, and we're only at the beginning.
Mark
The localization requirement—50% domestic value—that seems like it's causing real friction, especially for smaller suppliers.
Mimi
Absolutely. If you're a component maker and you've been importing subcomponents or raw materials from abroad, suddenly you have to source 50% locally. That's not just a paperwork change; it means finding new suppliers, negotiating new contracts, potentially redesigning products.
Luke
The article quotes an unnamed industry executive saying it's "a high bar," but we don't have numbers on how many companies actually failed to meet it or withdrew. We know it's challenging in theory, but how many are actually stuck?
Mimi
That's the gap. We know the audits are extensive and the compliance is strict, but we don't have data on rejection rates or companies that gave up.
Mark
What about the timeline? The government extended the scheme to FY28. Does that suggest they knew the original deadline was unrealistic?
Mimi
Possibly. Companies asked for more time, and the government granted it. That's a signal that the original FY27 end date wasn't giving manufacturers enough runway to build supply chains and hit production targets.
Luke
But we should note: the extension could also mean the government is confident enough in the scheme's potential that it's willing to stretch the runway. It's not necessarily a failure signal.
Mark
And the expectation is that claims will explode from FY26 onward?
Mimi
That's what both government officials and industry executives are saying. Once electric cars and larger vehicles get certified and start rolling off production lines, the incentive rates—up to 16% for automakers—become very attractive. The math changes.
Luke
But that's a forecast, not a fact. We won't know if it happens until it happens. What we can say is: the scheme is designed to run through FY28, and everyone involved is betting the real action starts in two years.
Le Pouls
- Of 81 enrolled companies, only four — Tata Motors, Mahindra Last Mile Mobility, Toyota Kirloskar Auto Parts, and Ola Electric — actually filed claims in FY24, exposing a wide chasm between intent and action.
- A mandatory 50% domestic value requirement is proving a genuine bottleneck, particularly for smaller component suppliers still dependent on imported technologies and raw materials.
- Disbursements have yet to flow, pending Industrial Finance Corporation of India audits, though Tata Motors expects its first tranche by Q3 of the current fiscal year, earmarked directly for EV investment.
- The scheme's incentive architecture — tiered rates of 8% to 16% with bonuses for EV and hydrogen components — is designed for scale that simply hasn't arrived yet in passenger cars and commercial vehicles.
- Industry consensus points to FY26 as the inflection point, when certified locally manufactured EVs and larger vehicles enter volume production and claims are expected to surge dramatically.
- The government has already extended the eligibility window to FY28, signaling confidence that the full ₹26,000 crore allocation will ultimately be claimed — just on a longer runway than first imagined.
India's ₹26,000 crore Production-Linked Incentives scheme for automotive manufacturing, launched in 2021 to seed a domestic electric vehicle industry, has drawn only ₹500 crore in claims from four companies in its first full fiscal year — a quiet opening that reveals less about the scheme's ambition than about the long gestation of industrial transformation. The gap between enrollment and execution is not unusual when a nation attempts to rewire its manufacturing DNA; localization mandates and compliance burdens are the friction of building something durable. Those closest to the process expect the slow trickle to become a flood by FY26, as homegrown electric vehicles mature and the scheme's deeper purpose comes into view.
India's ₹26,000 crore automotive Production-Linked Incentives scheme, designed to accelerate domestic manufacturing of electric and advanced vehicles, has had a muted debut. In FY24, only four companies — Tata Motors, Mahindra Last Mile Mobility, Toyota Kirloskar Auto Parts, and Ola Electric — submitted claims totaling roughly ₹500 crore, even as 81 companies are enrolled across the scheme's five-year life. Disbursements are pending audit and certification by the Industrial Finance Corporation of India, with Tata's CFO indicating the company expects its first payment by Q3 of the current fiscal year, funds it intends to direct into its EV operations.
The scheme offers automakers incentives of 13% to 16% of annual sales, with a bonus for crossing ₹10,000 crore in cumulative sales, while component suppliers can earn 8% to 11%, plus an additional 5% for battery-electric or hydrogen fuel cell parts. But a 50% domestic value requirement stands as a significant hurdle, especially for smaller suppliers whose production chains still depend heavily on imported inputs. Compliance audits add further complexity, slowing the pace at which companies can qualify and collect.
The early claims have come largely from the electric two- and three-wheeler segment, where manufacturing complexity is lower and market entry faster. Passenger cars and commercial vehicles — categories with higher incentive potential — are still working through certification and production ramp-up. Industry observers and government officials alike expect this to change sharply from FY26 onward, as locally manufactured EVs and larger vehicles reach volume production. The government has already extended the scheme's eligibility period to FY28 to accommodate the longer timelines manufacturers need. The prevailing view is that the entire allocation will be exhausted before the scheme closes — the slow start is not a stumble, but simply the unhurried first steps of a much larger industrial ambition.
India's ambitious ₹26,000 crore automotive incentive scheme is moving at a crawl. In its first full fiscal year of claims, just four companies—Tata Motors, Mahindra Last Mile Mobility, Toyota Kirloskar Auto Parts, and Ola Electric—submitted requests totaling around ₹500 crore. The Production-Linked Incentives scheme, launched in 2021 to turbocharge manufacturing in advanced automotive and electric vehicle sectors, has enrolled 81 companies across five years, yet the actual money flowing out remains a trickle.
Tata Motors and Mahindra Last Mile Mobility each filed claims near ₹100 crore for the fiscal year ending March 2024. Disbursements are expected to begin by year's end, after the Industrial Finance Corporation of India completes its audits and certifications. Tata's chief financial officer has signaled the company anticipates receiving its first tranche by the third quarter of the current fiscal year, money the automaker plans to channel directly into its electric vehicle business.
The scheme's structure is designed to reward scale and localization. Incentives range from 13% to 16% of annual sales for automakers, depending on revenue thresholds, with an additional 2% bonus for those hitting ₹10,000 crore in cumulative sales over the scheme's life. Component suppliers face a similar tiered system, earning 8% to 11% based on their sales performance, plus an extra 5% if they're making battery-electric or hydrogen fuel cell components. Yet these attractive rates mask a stubborn barrier: a 50% domestic value requirement that manufacturers must meet to qualify.
For smaller component makers, this localization threshold has proven a genuine obstacle. Many rely on imported technologies, raw materials, and subcomponents that complicate compliance with the rules. Industry executives acknowledge the requirement is sound policy—it's meant to build India's manufacturing base—but the first year has exposed how tight the constraint is for suppliers still adjusting their supply chains. Extensive audits ensure companies aren't gaming the system, adding another layer of friction to the process.
Yet nearly everyone in the industry expects the picture to shift dramatically starting in FY26. As locally manufactured electric cars, trucks, and larger vehicles receive certification and enter production, claims are projected to surge. Government officials and manufacturers alike believe the entire ₹26,000 crore allocation will be consumed by the time the scheme closes in FY28. The government already extended the program's eligibility period from FY27 to FY28, responding to requests from applicants who needed more time to ramp up production and localize their supply chains.
The slow start reflects the reality of industrial transformation. Electric two-wheelers and three-wheelers have driven most of the early claims, a segment with lower manufacturing complexity and faster time-to-market. Passenger cars and commercial vehicles—the categories with higher incentive potential—are still moving through certification and production ramp-up phases. Once those products hit the market in volume, the scheme's financial firepower will finally be tested. For now, the ₹500 crore in claims is less a sign of failure than a preview of what's coming: a scheme built for scale that is only now beginning to find its footing.
Citations marquantes
The 50% domestic value requirement is essential to encourage local production, but it's a high bar for component manufacturers, especially in the first year. Some manufacturers need more time to adjust their supply chains to comply fully.— Unnamed industry executive
We are expecting that by Q3, we should have the first funds being released, which are rightfully due to us as per the PLI scheme, and then that gives us the ability to start accruals. The PLI incentives are expected to become a major funding source for Tata's EV business from FY25.— P.B. Balaji, Chief Financial Officer, Tata Motors
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