Budget FY27: Allocation estimates for PLI Auto at Rs 5,940 crore

The Union Budget for 2026-27 (FY27) has allocated Rs 5,940 crore for the Production Linked Incentive (PLI) Scheme for Automobiles and Auto Components under the Ministry of Heavy Industries, double the allocation from FY26. The Rs 25,938-crore output-linked incentive scheme was launched in 2021 and will run till March 31, 2028 (FY28). 

Budget documents show that in FY25, the scheme had an allocation of Rs 325 crore. The budget estimate for FY26 was pegged at Rs 2,819 crore, while the actual estimate for the year stood at Rs 2,091 crore. The allocation for FY27 marks a sharp increase over earlier years, reflecting a gradual ramp-up in incentive payouts as projects under the scheme move into advanced stages of production.

Recently, MHI said the PLI Auto scheme has resulted in cumulative investments of Rs 35,657 crore, with incentive disbursements totalling Rs 2,321.94 crore as of December 31, 2025. The ministry has also noted that the scheme has catalysed the production of over 13.6 lakh electric vehicles and generated nearly 49,000 jobs.

The PLI scheme was introduced to boost domestic manufacturing of advanced automotive technology (AAT) products and attract investments across the automotive manufacturing value chain. Initially, incentives were applicable on determined sales value from the financial year 2022-23 for five consecutive financial years till 2026-27. The scheme was later amended to extend its tenure by one year, taking it to March 31, 2028.

The PLI Auto scheme comprises two components - the Champion OEM incentive scheme for battery electric vehicles and hydrogen fuel cell vehicles across all segments, and the Component Champion incentive scheme for high-technology and high-value automotive components.

Under the guidelines, incentives range from 13% to 18% for components used in electric vehicles and hydrogen fuel cell technologies, while other AAT products are eligible for incentives between 8% and 13%. The scheme mandates that at least 50% of a product’s value be generated domestically.

The government has approved 18 companies under the Champion OEM category, including Tata Motors, Mahindra & Mahindra, Maruti Suzuki, Toyota Kirloskar, Hyundai Motor India, Kia India, Piaggio, Eicher Motors, Hero MotoCorp, Bajaj Auto and Ola Electric.

Under the Component Champion category, 67 companies have received approvals, including Sona BLW Precision, Delphi-TVS Technologies, Bharat Forge, Bosch, Dana Anand India, Lumax Auto, Minda Corp, Aptiv Components, Ceat and Hero Cycles, among others.