Synopsis
Electric vehicle startups are pushing back against the current production-linked incentive (PLI) scheme for automobiles, arguing its stringent eligibility criteria favor established players. EV-first companies, despite leading in technology and localization, are excluded, facing a significant cost disadvantage against traditional OEMs. Founders call for reforms to align the scheme with India's evolving EV landscape.Listen to this article in summarized format
Several Indian electric-first companies remain outside the incentive framework due to stringent eligibility criteria, forcing them to operate at a significant cost disadvantage against traditional original equipment manufacturers (OEMs), founders said, calling for reforms in the scheme.
Under the scheme, OEMs must have a minimum revenue of Rs 10,000 crore and fixed assets of at least Rs 3,000 crore at the group level.
“It cannot be emphasised enough - the current framing of Auto PLI needs to stay closely aligned with the moment India is in,” said Tarun Mehta, CEO of two-wheeler EV manufacturer Ather Energy.
Over the past decade, several startups invested early in product development, software, power electronics and localisation, often without the cushion of legacy scale, he emphasised.
“Domestic value addition (DVA) benchmarks are similar across PLI and non-PLI players, so it would be wrong to assume that startups don’t lead DVA requirements,” Mehta said in a post on X. “These companies have consistently pushed deeper on indigenous development, building capabilities that are at par with, and in some cases ahead of, the broader industry.”
DVA is the value created within a country during the production of goods and services.
The concerns come after a senior government official told ET earlier this week that the auto PLI scheme is “not meant for startups but for global champions.”
Euler Motors, which operates in the electric three-wheeler cargo segment, said the scheme risks prioritising past scale over future capability.
“What the current PLI scheme is doing for startups is forcing us to operate at a structural cost disadvantage of 13-16% as compared to traditional OEMs in the same mohallas, same mandis, same cities,” Saurav Kumar, founder and CEO of Euler Motors, said in a LinkedIn post. He added that such a margin gap could be “life or death” for startups.
Companies such as Ather, Euler and River have been left out of the scheme, while successful applicants include Tata Motors, Mahindra & Mahindra, Maruti Suzuki, Toyota Kirloskar, Hyundai Motor India, Kia India, Piaggio, Eicher Motors, Hero MotoCorp, Bajaj Auto and Ola Electric.
Both Ather and Euler said they continue to invest in building domestic capability and jobs. Euler said it has invested over Rs 1,500 crore in indigenous EV technology, manufacturing and talent, and created close to 2,000 jobs.
Ather said it employs over 4,000 people directly and supports tens of thousands of indirect jobs across its supply chain and distribution network. The company has invested thousands of crores in R&D and capital expenditure, and is committing an additional Rs 2,000 crore towards a new greenfield manufacturing facility in Maharashtra.
India's EV penetration reached 7.8% in the fiscal year ending March 2025 (FY25), rising from 7.1% in FY24, according to Federation of Automobile Dealers Associations (FADA) data. While overall adoption is growing, it remains far below the government's target of 30% by 2030.
