The Union Budget 2026 has doubled the allocation for the Production Linked Incentive (PLI) scheme for automobiles and auto components to Rs 5,940 crore by 2026-27 from the budget estimate of Rs 2,818.85 crore in FY 26. The revised estimate for FY 26 is 2,091 crore rupees.

The Rs 25,938 crore PLI Auto scheme was envisaged to boost domestic manufacturing of advanced automotive technology products with a focus on battery electric vehicles and hydrogen fuel cell vehicles.
While the Auto PLI scheme has seen a jump in budget allocation, another PLI scheme for battery cells has seen a sharp cut in expenditure.

The government’s Rs 18.1 billion Advanced Cell Chemistry (ACC) PLI scheme to promote localization of battery cells has seen a 44.5% reduction in allocation from Rs 155.76 crore in FY26 to Rs 86 crore in FY27. The revised estimate for FY26 was 13.31 crore as only one battery cell maker, Ola Electric, has started commercial operations.

As of October 2025, only 2.8% (1.4 GWh) of the target capacity of 50 GWh has been commissioned within the stipulated time, entirely by Ola Electric. Of the 40 GWh allocated so far under ACC PLI, Reliance New Energy is the only beneficiary that has indicated to roll out its second round award capacity (10 GWh) on time, shows a report by JMK Research and the Institute of Energy Economics and Financial Analysis (IEEFA).

The total capacity awarded under this plan is 40 GWh, distributed among four beneficiary companies, of the 50 GWh on offer. In the first round of tenders held in March 2022, three companies (Reliance New Energy, Ola Electric Mobility and Rajesh Exports) were collectively awarded 30 GWh. Ola Electric received the largest stake in this round, securing 20 GWh. Ola Electric plans to commission 5 GWh of its 20 GWh by March 2026. “However, Ola’s decision to cap its capacity at 5 GWh until FY 2029 dilutes the commitments under the scheme,” the report said.

Beneficiaries have faced significant supply chain and implementation bottlenecks, including strict domestic value-added (DVA) requirements, an aggressive two-year installation schedule, and delays in visa approvals for Chinese technical specialists needed for equipment installation, resulting in delays in commissioning capacity, the report noted.

For the Innovative Vehicle Improvement Scheme PM E-DRIVE (PM E-DRIVE), the Union Budget 2026 has allocated Rs 1,500 crore for FY27, up 62.5 percent from the Rs 4,000 crore budgeted in FY26. To be clear, the revised estimate for the PM E-DRIVE scheme in FY26 was Rs 1,300 crore of rupees