Bajaj Auto emerged as the biggest recipient of incentives under India’s Production Linked Incentive (PLI) scheme for automobiles and auto components in FY26, receiving ₹625.65 crore, according to a new assessment by NITI Aayog and the Indian Institute of Management Ahmedabad. Tata Motors and Ola Electric Technologies followed, highlighting the growing role of government incentives in supporting domestic manufacturing of advanced automotive technologies.
The payouts increased sharply compared with the previous financial year, but the assessment also identified a gap between investment and employment generation. While manufacturers invested more than the scheme’s five-year target by March 2026, the programme had created only 46% of its projected jobs. The findings raise questions about how effectively India’s automotive manufacturing incentives are translating into wider economic benefits.
Bajaj Auto Leads Auto PLI Incentive Recipients in FY26
Bajaj Auto received the highest incentive payout among automobile manufacturers under the PLI-Auto scheme in FY26. Tata Motors ranked second, while Ola Electric Technologies secured the third-largest payout.
The company-wise incentive figures reported in the NITI Aayog-IIM Ahmedabad assessment are:
| Company | FY26 incentive payout |
|---|---|
| Bajaj Auto | ₹625.65 crore |
| Tata Motors | ₹403.18 crore |
| Ola Electric Technologies | ₹366.78 crore |
| TVS Motor | ₹320.51 crore |
| Mahindra & Mahindra | ₹283.82 crore |
The five manufacturers collectively received nearly ₹2,000 crore during FY26. Bajaj Auto’s payout was substantially higher than those of its competitors, reflecting its position among the scheme’s eligible manufacturers.
The distribution also marks a significant change from FY25. Bajaj Auto and TVS Motor had received no incentives in that year, while Tata Motors received ₹142.13 crore, Mahindra & Mahindra received ₹104.08 crore and Ola Electric received ₹73.74 crore.
Total disbursements rose from approximately ₹322 crore in FY25 to nearly ₹2,000 crore in FY26, demonstrating a sharp acceleration in payments under the programme.
What Is India’s PLI-Auto Scheme?
The Production Linked Incentive scheme for automobiles and auto components was approved by the Union government in September 2021 with a budgetary outlay of ₹25,938 crore.
The programme aims to strengthen India’s manufacturing capabilities in Advanced Automotive Technology (AAT) products, including electric vehicles, batteries and other advanced automotive components.
Rather than providing incentives simply for establishing factories, the scheme links financial support to eligible manufacturing activity and incremental sales. Its broader objective is to encourage companies to invest in domestic production, adopt advanced technologies and reduce dependence on imported components.
The scheme operates through two broad categories:
- Champion OEM: Covers eligible original equipment manufacturers producing advanced-technology vehicles.
- Component Champion: Covers manufacturers producing advanced automotive components.
Companies must also meet a minimum domestic value addition (DVA) requirement of 50% to qualify for incentives. This condition is intended to ensure that government support contributes to domestic manufacturing rather than simply encouraging the assembly of imported products.
Investment Target Exceeded, but Job Creation Falls Short
One of the most important findings in the assessment is the difference between investment growth and employment generation.
By March 2026, cumulative investment under the automotive PLI scheme had reached ₹44,326 crore, exceeding the five-year investment projection of ₹42,500 crore by approximately 4%.
However, employment generation remained significantly below expectations.
| Performance indicator | Five-year projection | Achievement by March 2026 |
|---|---|---|
| Investment | ₹42,500 crore | ₹44,326 crore |
| Employment | 148,147 jobs | 67,820 jobs |
| Incremental sales | ₹2.31 lakh crore | ₹52,414 crore |
The scheme generated approximately 46% of its projected employment and achieved around 23% of its incremental sales target by March 2026.
This suggests that companies have moved faster in building manufacturing capacity and investing in technology than in generating the expected number of jobs and additional sales.
The assessment notes that advanced automotive manufacturing can be capital-intensive. Investments in automated production lines, research facilities and sophisticated components do not necessarily create jobs at the same pace as traditional manufacturing operations.
However, the report also points out that the long-term employment impact will depend on whether these investments translate into higher production, greater domestic sourcing and expansion across the automotive supplier ecosystem.
Electric Vehicle Production Under the Scheme Expands
The PLI-Auto scheme has also coincided with a sharp increase in the number of electric vehicles covered by its incentive framework.
The assessment highlights significant growth in eligible EV volumes, particularly in the electric two-wheeler segment.
| Vehicle category | FY24 | FY25 |
|---|---|---|
| Electric two-wheelers | 76,838 | Nearly 12.85 lakh |
| Electric three-wheelers | 23,486 | Nearly 2.15 lakh |
| Electric four-wheelers | 11,314 | 68,226 |
Electric two-wheelers accounted for the largest increase. The number of vehicles covered by the scheme rose from 41,758 in FY24 to more than 10 lakh in FY25, according to the assessment’s reported figures.
The expansion reflects the rapid development of India’s electric two-wheeler manufacturing segment, where companies have introduced new models and expanded production capabilities.
Electric three-wheelers also recorded substantial growth, while eligible electric four-wheeler volumes increased at a comparatively slower pace.
The scheme’s impact should not, however, be interpreted as proof that all this production growth was caused by PLI incentives. The assessment found that available data was insufficient to isolate the programme’s contribution from other market developments and government policies.
Domestic Value Addition Remains a Challenge
Despite the investment growth, manufacturers continue to face difficulties meeting the scheme’s localisation requirements.
The mandatory 50% domestic value addition threshold is intended to encourage companies to source more components and technology from within India. However, the country’s supply chain for advanced automotive technologies is still developing.
This is particularly relevant for electric vehicles, which depend on batteries, power electronics, motors, semiconductor components and other specialised technologies.
The assessment noted that high investment and turnover requirements can also favour larger manufacturers, potentially making it harder for smaller companies to participate.
As of the assessment, eight applicants under the Champion OEM category had received domestic value addition certification covering 94 variants. Ten Component Champion applicants had secured certification for 37 variants.
Expanding the number of eligible domestic suppliers will be important if the programme is to increase localisation beyond final vehicle assembly.
What the Findings Mean for India’s Automotive Industry
The FY26 incentive figures show that the automotive PLI programme is moving into a more active disbursement phase. Bajaj Auto’s leading payout, followed by Tata Motors and Ola Electric, illustrates how established manufacturers and newer EV-focused companies are participating in the same incentive framework.
For India’s automotive industry, the programme could support investments in electric mobility, advanced components and manufacturing technology. A stronger domestic supply chain could also improve the competitiveness of Indian manufacturers and create opportunities for component suppliers.
However, the employment and incremental sales figures indicate that investment alone is not enough to establish the programme’s long-term success. The next phase will require manufacturers to use their new capacity more effectively, increase production and expand domestic sourcing.
The Bigger Picture
India’s automotive PLI scheme is part of a wider government strategy to strengthen domestic manufacturing and reduce dependence on imported technology. The sector is particularly important as the global automotive industry shifts towards electric mobility, connected vehicles and advanced electronic systems.
The latest assessment presents a mixed picture: investment has exceeded its target, but employment and incremental sales remain behind projections. Whether the programme delivers lasting economic benefits will depend on how quickly new manufacturing capacity translates into competitive products, stronger supplier networks and sustainable jobs.
Looking Ahead
Bajaj Auto’s position as the largest recipient of auto PLI incentives in FY26 highlights the growing scale of government support for eligible manufacturers. Tata Motors, Ola Electric, TVS Motor and Mahindra & Mahindra also received substantial payouts, showing that the benefits are spread across several major players in India’s automotive market.
The next challenge is to convert these incentives and investments into measurable industrial outcomes. Greater domestic value addition, higher incremental sales, stronger exports and broader employment generation will be important indicators of the scheme’s success as it continues through its five-year performance period ending in FY28.
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