The Centre expects payouts under its \u20b925,938 crore production-linked incentive scheme for automobiles and auto components (PLI Auto) to more than double in FY27, as the scheme moves into a more mature phase.<\/p>\n
The ministry of heavy industries estimates it will disburse about \u20b94,700 crore in the current fiscal, of which roughly \u20b9800 crore has already been paid, according to two government officials aware of the matter. This follows disbursements of \u20b9246 crore in FY25 and \u20b92,000 crore in FY26.<\/p>\n
The projected increase comes even as the scheme remains below its original payout trajectory. While 82 companies were shortlisted as \u2018Champion OEMs\u2019 (original equipment manufacturers) and \u2018Component Champions\u2019 in early 2022, only eight vehicle manufacturers and 10 component makers currently have products that qualify for incentives, according to the PLI Auto portal.<\/p>\n
Mint explains why payouts are expected to rise, how they compare with the scheme\u2019s original targets, and what the slow rollout says about the scheme\u2019s implementation.<\/p>\n
The ministry of heavy industries expects to disburse \u20b94,700 crore in FY27 under PLI Auto, the Centre\u2019s biggest supply-side incentive scheme for clean mobility, according to two government officials aware of the matter.<\/p>\n
The incentives will be paid to manufacturers of advanced automotive technology, including zero-emission vehicles and their components, for incremental sales in the previous fiscal.<\/p>\n
Experts said the sharp increase in payouts reflects the scheme reaching maturity and stronger auto sales in FY26.<\/p>\n
\u201cThe disbursement of Auto PLI has more than doubled in the last two years due to two counts: one, the scheme has reached its maturation stage and the impact is more visible; and second, that last year auto sales hit record numbers,\u201d said Amit Bhatt, India managing director of global think tank International Council on Clean Transportation.<\/p>\n
India\u2019s auto market is expected to see moderate volume growth in FY27, with passenger vehicles (PVs) growing 4\u20136%, two-wheelers (2Ws) 3\u20135% and commercial vehicles (CVs) 4\u20136%, according to the July outlook by credit rating agency Icra Ltd.<\/p>\n
This follows estimated FY26 growth of 7.8% for PVs, 9% for 2Ws and 12.6% for CVs, which was supported by cuts in the goods and services tax (GST) in September 2025 that moved many two-wheeler and passenger car models from the 28% to the 18% slab.<\/p>\n
The Centre\u2019s FY27 Outcome Budget targets \u20b95,922 crore in PLI Auto incentive disbursals, against an allocation of \u20b95,939 crore. That is broadly in line with the scheme\u2019s original third-year payout target of \u20b95,925 crore, but the ministry\u2019s current \u20b94,700-crore estimate is still 21% lower than the target.<\/p>\n
Under the original incentive disbursal plan, the government was to pay \u20b9604 crore in FY25 and \u20b93,150 crore in FY26. Actual disbursements were much lower, at \u20b9246 crore in FY25 and \u20b92,000 crore in FY26.<\/p>\n
The PLI Auto scheme received the Union cabinet\u2019s approval in 2021 and provides incentives for five years, from FY25 to FY29.<\/p>\n
Although 82 companies were shortlisted as \u2018Champion OEMs\u2019 and \u2018Component Champions\u2019 in early 2022, only eight vehicle manufacturers and 10 component makers currently have products qualified for incentives, according to the PLI Auto portal. Automakers and component makers must meet stringent domestic value-addition requirements, which have proved challenging for many of the shortlisted companies.<\/p>\n
The scheme links incentives to incremental sales of eligible advanced automotive technology products, including zero-emission vehicles and components.<\/p>\n