TL;DR
India's Union Budget 2026 triples PLI scheme allocation for the automotive sector to Rs 59.4 billion, targeting increased EV adoption and local manufacturing, supported by strategic focus on rare-earth minerals.
The Indian government has significantly increased the allocation for the Production Linked Incentive (PLI) scheme for automobiles and auto components, a move expected to substantially support electric vehicle (EV) penetration and local manufacturing. The Union Budget 2026 saw a threefold increase in this allocation, reaching Rs 59.4 billion for FY27, up from Rs 20 billion in FY26. This heightened investment underscores the government's commitment to bolstering domestic production capabilities and accelerating India's transition towards electric mobility.
While EV adoption in India is still in its nascent stages, with electric vehicles accounting for approximately 5-6 percent of two-wheeler sales and 3-4 percent of passenger vehicle sales, the increased PLI allocation is poised to stimulate further growth. Beyond financial incentives, the government is also focusing on critical minerals and components by planning rare-earth magnet corridors in states like Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. This strategic initiative aims to reduce import dependency and strengthen the reliability of the EV supply chain by ensuring domestic availability of essential resources.
