The Indian government expects the roster of companies receiving production-linked incentives (PLI) for the automobile sector to rise from 10 to 18 by the end of financial year 2026-27, the Ministry of Heavy Industries (MHI) said on Wednesday. Three additional vehicle manufacturers and five more auto component suppliers are set to begin claiming benefits from FY27.
Approved by the Union Cabinet in September 2021, the auto PLI scheme has a total outlay of Rs 25,938 crore over five years. Of 115 applicants, 82 firms were approved for support, but the ministry has moved to enforce performance rules after several beneficiaries failed to invest.
Hanif Qureshi, additional secretary at MHI, said officials will invoke bank guarantees held by 10 approved auto component makers that recorded zero investment in the last two consecutive financial years. He did not disclose the names of those companies, but confirmed they were component suppliers.
Early disbursements under the scheme were modest while companies were establishing manufacturing capacity and achieving the required domestic value addition (DVA) threshold of more than 50 per cent. MHI recorded payouts of Rs 2.63 crore in FY24 and Rs 325.37 crore in FY25. In FY26, the ministry has disbursed roughly Rs 2,000 crore so far against Rs 2,091.26 crore sanctioned for the year.
India auto PLI incentives drive for electric vehicle production
The scheme has already supported significant volumes of electric vehicle production. To date, incentives have been paid for 1.042 million electric two-wheelers, 238,385 electric three-wheelers, 79,540 electric four-wheelers, and 1,391 electric buses. Officials expect sanctioned incentives to rise sharply in the next financial year as more manufacturers begin selling DVA-compliant models and claim the benefits.
In FY26, five vehicle manufacturers — Mahindra & Mahindra, Tata Motors, Bajaj Auto, TVS Motor, and Ola Electric — have received or will receive incentives. Component suppliers that have benefited include Delphi-TVS Technologies, Sona BLW Precision Forgings, Bosch Automotive Electronics India, and Tata Autocomp Systems. Toyota Kirloskar Auto Parts, which drew incentives in FY25, paused claims in FY26 but is expected to resume in FY27.
From FY27, MHI anticipates Eicher Motors, Pinnacle Mobility Solutions, and Hero MotoCorp will join vehicle makers availing incentives. The five component suppliers likely to start claiming support are Dana TM4 India, Uno Minda, Varroc Engineering, Napino Auto, and Electronics and Cummins Technologies India.
Officials say invoking bank guarantees is necessary to preserve the scheme’s integrity and to ensure incentives flow to active investors. The measure follows the scheme’s conditions that permit guarantee invocation if an approved participant posts zero investment in two consecutive years.
With India pushing for greater localisation and electrification of road transport, the expanded list of beneficiaries aims to accelerate domestic value addition, broaden supply chains and support the scale-up of electric vehicle manufacturing. The ministry’s outlook assumes that as production and domestic content rise, incentives will increasingly reward commercial volumes rather than capacity build-up alone.
Industry observers note that timely disbursement and strict enforcement of investment conditions will be key to retaining investor confidence and ensuring the scheme meets its stated goal of strengthening India’s automotive manufacturing base while supporting the transition to electric mobility.
Key Takeaways:
- India auto PLI incentives will cover 18 firms by FY27 as three vehicle makers and five component suppliers join the scheme.
- The ministry will invoke bank guarantees for 10 component makers that made no investment over two years.
- Disbursements rose to around Rs 2,000 crore in FY26 so far, with larger payouts expected as more DVA-compliant vehicles reach the market.
- Over one million electric two-wheelers and significant numbers of e-three and e-four wheelers have qualified for incentives to date.
