 "Auto PLI favours large OEMs, Ather tells PMO")
Ather Energy has told the Prime Minister’s Office (PMO) that the current design and implementation of the production-linked incentive (PLI) scheme for the automobile sector has disproportionately benefited large, incumbent automakers and created bottlenecks for startups.
According to Ather, the current scheme also has high eligibility thresholds and rigid requirements.
The electric two-wheeler maker, which is not a beneficiary under the scheme but now wants to participate, sent its representation to the PMO earlier this month via industry group Startup Policy Forum.
Business Standard has reviewed the document.
In its representation, Ather stated: “Trends indicate that incentives under the PLI scheme have largely flowed to big players like Tata Motors, Mahindra & Mahindra, Bajaj Auto, Hyundai, Hero MotoCorp and TVS Motor… Startups and new-age companies, despite their role in indigenous R&D, remain sidelined, dependent on larger firms as Tier-II or III suppliers. This not only risks market monopolisation and weakens domestic value-chain diversity but can also create systemic vulnerability within the electric vehicle (EV) sector.”
The PLI framework, Ather said, has the national ambition to boost local manufacturing, reduce import dependence, and solidify India as a global hub for EVs and allied technologies.
“However, the scheme’s high eligibility thresholds, rigid requirements, and incentive structures have concentrated benefits among large corporations. Despite the intent to foster innovation, actual PLI benefits have accrued almost exclusively to established players, indicating a pronounced bottleneck for startups and new-age deep-tech companies. It risks undermining the goal of fostering indigenous innovation, diversified supply chains, and a globally competitive EV ecosystem,” it added.
None of the companies, as well as the PMO, responded to queries sent by Business Standard. An industry source, however, claimed Hyundai has not availed any incentives under the PLI scheme so far.
Ather has asked the PMO to introduce a “multi-window” framework under the auto PLI scheme, allowing applications to be opened in multiple rounds instead of being restricted to a single window that closed in March 2021.
It said the auto PLI scheme should follow the model of the Advanced Chemistry Cell (ACC) PLI scheme, where capacity lost due to non-performance is reallocated through fresh bidding. This mechanism does not currently exist under auto PLI.
The PLI scheme for the automobile and auto components sector was approved by the Union Cabinet on September 15, 2021, with a total outlay of ₹25,938 crore to run over five years.
Under the scheme, 115 companies applied and 82 have been approved — including original equipment makers (OEMs) or vehicle makers as well as auto component makers.
Under the scheme, an OEM must sell at least ₹125 crore worth of eligible vehicles in the first year to qualify for incentives.
They must increase these sales by at least 10 per cent each year to continue receiving them.
“In practice, many entities are unable to consistently maintain the required sales performance year-on-year (Y-o-Y). This inadvertently creates a situation where such entities retain scheme eligibility despite not meeting annual criteria, thereby limiting efficient use of scarce incentive resources,” Ather stated.
Ather asked the PMO to ensure disqualification of entities that fail to meet prescribed annual sales thresholds, which would create opportunities for players with sustained sales.
Ather said that ensuring "stricter adherence" would give more deserving companies — including startups and new-age deep-tech firms — a chance to qualify and contribute to the scheme.
Ather stated: “As of December 2024, only 12 out of 82 approved applicants (less than 15 per cent) met the mandated 50 per cent domestic value addition (DVA) target — including six OEMs and six component makers. Another 12 entities (one OEM and 11 component makers) also failed to meet the initial two-year investment requirement.”
Under the scheme, the “DVA target mandates that companies source at least 50 per cent of a product’s value from India to qualify for PLI incentives.
The “initial two-year investment requirement” mandates four-wheeler OEMs to make cumulative investments of ₹1,100 crore, two-wheeler or three-wheeler OEMs to invest ₹550 crore, and auto-component makers to put in ₹140 crore.
This must be within the first two performance years to remain eligible for incentives.
“Although the PLI-auto scheme — launched in 2021 — aimed to generate ₹2.3 trillion over five years in incremental production, cumulative determined sales by December 2024 stood at merely at ₹15,230 crore,” Ather stated.
Ather also objected to the current requirement under the Auto PLI scheme that mandates OEMs to have at least Rs 10,000 crore in group revenue and Rs 3,000 crore in fixed asset investment to qualify for incentives. It argued that these thresholds effectively exclude "asset-light, R&D-driven deep-tech startups" and tilt the scheme in favour of much larger and established companies.
To address this, Ather has proposed a tiered eligibility framework under the Auto PLI scheme. This would involve introducing lower, differentiated revenue and investment thresholds for startups and new-age deep-tech companies, similar to the approach adopted in the Telecom PLI scheme, which had separate eligibility criteria for domestic manufacturers.
Ather has also called for a dedicated, innovation-linked sub-window under the Auto PLI scheme for EV startups and new-age deep-tech companies. It argued that incentives should not be tied only to sales performance but also linked to parameters such as R&D intensity, patent filings, creation of indigenous intellectual property, and commercialisation of locally developed technologies.
"The exclusion of startups and new-age deep-tech companies from PLI benefits has significant economic and employment implications. India potentially risks loss of high-value domestic IP, slower innovation cycles, and increased dependence on imported technologies," it added.
What Ather says
- Urges disqualification of firms failing annual sales targets, freeing incentives for others
- Objects to high revenue and asset thresholds, excluding asset-light EV startups
- Proposes tiered eligibility and innovation-linked incentives beyond pure sales metrics
