Auto PLI Drives Domestic e2W Growth, Raises Export Concerns

05 Mar 2026 CW Team

The report found that non-PLI electric two-wheeler manufacturers experienced a sharp market contraction, with growth falling from 407 per cent in FY22 to minus 33 per cent in FY24 and further to minus 11 per cent in FY25 following the rollout of the scheme. It noted that PLI-approved original equipment manufacturers benefit from an estimated 13-16 per cent cost advantage, enabling more aggressive pricing strategies and faster capacity expansion that have distorted market structure.

The analysis highlighted a stark contrast in export performance, with 77 per cent of India's electric two-wheeler exports driven by non-PLI models and PLI-approved models accounting for less than one-fourth of total exports despite the cost edge. The centre cautioned that a policy focus solely on scaling production risks undermining long-term competitiveness and could lead to the loss of key traditional export markets such as Nepal and parts of Latin America and Africa to Chinese manufacturers like Yadea and Sunra.

The report recorded that by December 2025 only Rs 23,219.4 mn had been disbursed against a cumulative target of Rs 37,540 mn, with only nine per cent of the total outlay disbursed against an expected 14.47 per cent. It recommended opening a targeted window for innovation-led original equipment manufacturers that demonstrate strong localisation depth by complying with the PM E-DRIVE Phased Manufacturing Programme, adopting a first-come-first-serve mechanism to prevent inactive players from hoarding approvals and fiscal space, and conducting periodic performance reviews to exit non-performing beneficiaries and reallocate fiscal space.

The Centre for Digital Economy Policy Research reported that the auto production-linked incentive scheme has accelerated production scale among approved electric two-wheeler manufacturers but has materially altered competitive dynamics, with the cost advantage largely used to capture domestic market share rather than to build export-ready platforms. The think tank warned that the current design favours scale at the expense of innovation and may marginalise companies that invested heavily in early technological development. The report found that non-PLI electric two-wheeler manufacturers experienced a sharp market contraction, with growth falling from 407 per cent in FY22 to minus 33 per cent in FY24 and further to minus 11 per cent in FY25 following the rollout of the scheme. It noted that PLI-approved original equipment manufacturers benefit from an estimated 13-16 per cent cost advantage, enabling more aggressive pricing strategies and faster capacity expansion that have distorted market structure. The analysis highlighted a stark contrast in export performance, with 77 per cent of India's electric two-wheeler exports driven by non-PLI models and PLI-approved models accounting for less than one-fourth of total exports despite the cost edge. The centre cautioned that a policy focus solely on scaling production risks undermining long-term competitiveness and could lead to the loss of key traditional export markets such as Nepal and parts of Latin America and Africa to Chinese manufacturers like Yadea and Sunra. The report recorded that by December 2025 only Rs 23,219.4 mn had been disbursed against a cumulative target of Rs 37,540 mn, with only nine per cent of the total outlay disbursed against an expected 14.47 per cent. It recommended opening a targeted window for innovation-led original equipment manufacturers that demonstrate strong localisation depth by complying with the PM E-DRIVE Phased Manufacturing Programme, adopting a first-come-first-serve mechanism to prevent inactive players from hoarding approvals and fiscal space, and conducting periodic performance reviews to exit non-performing beneficiaries and reallocate fiscal space.

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