India’s automotive industry is undergoing a historic transformation, driven by electrification, sustainability, and advanced technology. At the heart of this shift lies the Production Linked Incentive (PLI) Auto scheme, which has already catalyzed massive investments and accelerated EV adoption. Now, the government is reportedly weighing a new PLI scheme tailored for startups and small enterprises, potentially reshaping the competitive landscape of the sector.
🚗 The Current PLI Auto Scheme: A Success Story
Launched with a budgetary outlay of ₹25,938 crore, the existing PLI Auto scheme covers a five-year performance period (FY2023–24 to FY2027–28). Its focus is on Advanced Automotive Technology (AAT) products, including electric vehicles, hydrogen fuel cells, and high-tech components.
- Investments attracted: ₹35,657 crore (as of December 2025).
- Incentives disbursed: ₹2,321.94 crore.
- Jobs created: Nearly 49,000.
- EVs supported: Over 13.6 lakh units across two-, three-, and four-wheelers.
Major beneficiaries include Tata Motors, Bajaj Auto, Mahindra & Mahindra, TVS Motor, and Ola Electric, all of whom have leveraged the scheme to scale production and innovation.
⚡ Why a New Scheme?
While the current PLI scheme has been successful, startups and smaller units have raised concerns. Companies like Ather Energy argue that the existing framework’s high turnover and investment thresholds favor large incumbents, leaving smaller innovators at a disadvantage.
The government has ruled out reopening the existing scheme but is open to considering a separate PLI Auto scheme for startups and small enterprises—provided the industry builds consensus and submits a detailed proposal.
📊 Comparison Snapshot
| Aspect | Current PLI Auto Scheme | Proposed New Scheme |
|---|---|---|
| Budgetary Outlay | ₹25,938 crore | TBD (likely smaller, focused) |
| Beneficiaries | Large OEMs, Tier-1 suppliers | Startups, small units |
| Thresholds | High turnover & investment | Lower, more inclusive |
| Focus Areas | EVs, hydrogen, AAT products | Innovation, niche EV tech |
| Impact So Far | ₹35,657 crore investment, 13.6 lakh EVs | Potential democratization of incentives |
🌍 Strategic Importance
A new PLI scheme for startups could:
- Encourage innovation in battery tech, charging solutions, and lightweight EVs.
- Level the playing field by offering incentives to smaller players.
- Boost entrepreneurship in the auto sector, aligning with India’s “Startup India” vision.
- Accelerate EV adoption by diversifying product offerings beyond mainstream OEMs.
⚠️ Challenges and Trade-Offs
- Consensus Requirement: The government insists industry stakeholders must agree before moving forward.
- Budget Allocation: Designing a scheme that balances fiscal prudence with meaningful support.
- Monitoring: Ensuring startups deliver results without misuse of incentives.
- Overlap Risks: Avoiding duplication with the existing PLI Auto scheme.
🏁 Conclusion
The government’s consideration of a new PLI Auto scheme for startups and small enterprises signals a recognition that India’s EV revolution cannot be driven by large OEMs alone. By empowering smaller innovators, the scheme could democratize incentives, foster entrepreneurship, and accelerate India’s transition to clean mobility.
If implemented, this new initiative would complement the existing PLI Auto scheme, ensuring that both industry giants and nimble startups contribute to shaping India’s automotive future.
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