Auto PLI Scheme: Non-PLI EV Makers See Growth Crash to -33% as Market Distortion Deepens

The Auto PLI scheme has created a 13-16% cost advantage for major OEMs, but a new study by C-DEP warns this is stifling innovation and hurting India’s electric vehicle exports.

While India’s Electric Vehicle (EV) revolution continues to gain momentum, a recent study by the Centre for Digital Economy Policy Research (C-DEP) has raised red flags regarding the Auto Production Linked Incentive (PLI) scheme. The report reveals a stark "digital divide" in the electric two wheeler (e2W) industry, where non-PLI beneficiaries are witnessing a massive collapse in growth.

The Growth Paradox: From 407% to -33%

According to the C-DEP report, the competitive landscape for electric two wheelers has shifted dramatically since the rollout of the PLI scheme. Small and innovation led EV manufacturers who were the early pioneers of the Indian EV ecosystem recorded a staggering 407% growth in FY2022.

However, post-PLI rollout, their growth plummeted to -33% in FY2024 and further declined to -11% in FY2025.

Domestic Dominance vs. Export Lag

The study highlights that PLI-approved OEMs benefit from a significant 13% to 16% cost advantage. While this has allowed major players to scale production and offer aggressive pricing in the domestic market, it hasn't translated into global competitiveness.

In a surprising revelation, the report found that 77% of India’s e2W exports are still driven by non-PLI models. Despite their cost benefits, PLI-approved models account for less than one fourth of total exports.

"The current design of the auto PLI scheme inadvertently disadvantages innovation driven companies that are investing heavily in R&D," said Jaijit Bhattacharya, President of C-DEP. He warned that focusing solely on scale risks India losing traditional export markets like Nepal, Africa, and Latin America to Chinese EV giants like Yadea and Sunra.

The Problem of "Inactive" Players

One of the most critical points raised in the study is the presence of "inactive" beneficiaries. Out of the nine e2W OEMs approved under the Auto PLI scheme, only four are actively selling vehicles. Companies like Hop Electric, Axis Clean Mobility, and others have recorded negligible or zero sales of PLI-approved models, effectively "hoarding" fiscal space in the ₹25,938 crore scheme.

As of December 2025, only ₹2,321.94 crore had been disbursed just 9% of the total outlay.

Recommendations for a Level Playing Field

To prevent a monopoly and foster genuine technological depth, C-DEP has recommended:

1. Targeted Windows: Opening the scheme for innovation led OEMs that comply with PM E-DRIVE’s Phased Manufacturing Programme (PMP).

2. Performance Reviews: Implementing a "first-come-first-serve" mechanism and exiting non-performing players to reallocate funds.

3. Innovation Incentives: Introducing a 3-5% incentive specifically for complex segments like electric motorcycles, which currently have only 0.1% penetration.

Conclusion

For India to become a global EV hub, the policy focus must shift from merely rewarding "scale" to protecting the "innovation" that startups bring to the table. Without a course correction, the very companies that started India’s green mobility journey might be the ones left behind.