PLI-Auto adds three more firms to roster
New Delhi: The Centre has approved products made by three more companies—Pinnacle Mobility, Varroc Engineering, and Napino Auto and Electronics—under its flagship production-linked incentive (PLI) scheme for the auto sector, according to data from the government's PLI-Auto portal. he move comes despite limited payouts so far and a sharp cut in the scheme's disbursal target for FY26.
According to the portal, EKA Mobility, a subsidiary of Pinnacle Mobility, was approved on 20 May for an electric bus model. Varroc got the green light for seven components on 28 April, while Napino Auto was cleared for an engine management system on 9 May.
'This recognizes EKA's compliance with the stringent eligibility requirements laid out under the PLI scheme for advanced and indigenized electric vehicle platforms,' the company said in a 21 May statement. Varroc and Napino did not respond to Mint's queries.
The fresh approvals mark a renewed push to expand the ₹ 25,938 crore PLI-Auto scheme beyond legacy players. But only four companies have received payouts so far, and the budget estimate for FY26 has been cut to ₹ 336 crore from ₹ 3,150 crore last year.
These approvals also reflect the growing familiarity with the scheme's requirements, according to Ashim Sharma, senior partner and Business Unit head, Nomura Research Institute Solutions and Consulting.
'Additionally, this also shows that all stakeholders have now completed the learning curve that comes with schemes such as the PLI-Auto scheme. It is likely that companies are now able to ensure that their documentation and other requirements are more 'first time right',' said Sharma.
Notified in 2021, the PLI-Auto scheme aims to boost domestic manufacturing of advanced automotive technologies and position India as a global electric vehicle (EV) hub. Of the 115 applicants, 82 were shortlisted as 'Champion OEMs' and 'Component Champions' in early 2022, including Pinnacle, Varroc and Napino.
The government began approving individual products under the scheme in June 2023, following the initial shortlisting of firms.
But shortlisting is only the first step. To claim incentives, companies must secure product-level approvals from designated automotive testing agencies, based on compliance with technology-readiness and domestic value addition norms. If a vehicle or component is approved by these agencies, the company receives a certificate making the model eligible for incentives under the scheme.
So far, 101 product models across 16 companies have received such approval.
Yet, only Tata Motors, Mahindra & Mahindra, Ola Electric, and Toyota Kirloskar Auto Parts have received actual payouts. Tata Motors and Mahindra were granted about ₹ 246 crore in January 2025, followed by ₹ 73.74 crore to Ola Electric in March. The ministry of heavy industries said on 26 March that Toyota Kirloskar Auto Parts had also received disbursals, but did not disclose the amount.
As Mint reported on 28 February, policy uncertainty has weighed on EV sales, in turn delaying PLI disbursals, which are contingent on post-certification sales.
The scheme provides incentives on incremental sales achieved after certification, with claims submitted the following fiscal. For instance, FY25 sales would be eligible for claims filed in FY26. Certification requires proof of at least 50% localisation in approved models.
The recent acceleration in PLI-Auto approvals marks a calibrated push towards reshaping India's role in the global EV and auto component value chain, said Randheer Singh, former director with the Niti Aayog.
"It reflects the government's intent to expand the beneficiary base beyond legacy OEMs to include next-gen mobility innovators and strategic component makers, a signal that India wants to hedge against global supply disruptions and diversify its manufacturing bets," Singh said.
The scheme caters to both incumbent auto firms and new entrants from other sectors. OEMs must have annual revenues of at least ₹ 10,000 crore and invest ₹ 3,000 crore in fixed assets. For component makers, the thresholds are ₹ 500 crore in revenue and ₹ 150 crore in investment.
New entrants from outside the auto sector need a global net worth of ₹ 1,000 crore and must commit investment over five years.
"Beyond certification, automotive testing agencies are becoming gatekeepers of technology readiness and enablers of deep localisation. Their role must now evolve from compliance monitoring to innovation facilitation, co-developing standards with industry and fast-tracking advanced prototypes," said Singh.
EKA Mobility, which recently secured approval under the scheme, has an order book of over 3,500 electric commercial vehicles, including trucks, buses and light commercial vehicles. It operates a manufacturing plant in Chakan, near Pune. Founder and chairperson Sudhir Mehta has reportedly said the company aims to produce 10,000 electric buses annually by FY27.
In FY26, the auto component industry's revenues are likely to grow 8-10%, compared to the highs of approximately 14% in FY24, said ratings agency Icra in a February 2025 estimation.
The ratings agency also projected the Indian passenger vehicle industry volumes to grow by 4-7% in FY26, a pickup from the muted 0-2% increase seen in FY25.
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Mint
3 hours ago
- Mint
India's EV dreams are caught between rare earth and a hard place
New Delhi/Mumbai: Bajaj Auto's earnings call on the evening of 29 May, replete with revenue and profits and margins and ratios, was trundling along the way such calls usually trundle. And then, as the discussion veered towards electric vehicles (EV), the leadership dropped a bombshell. 'It's a threat to the entire EV business," executive director Rakesh Sharma intoned sombrely. 'There is no short-term solution. Alternatives exist, but they will take time to develop." Sharma was referring to China's restrictions on the export of rare earth magnets, imposed the previous month. Rare earth metals are crucial to make the motors that turn the wheels of EVs and China is estimated to control over 90% of the world's production. Aside from conventional bikes, Bajaj makes e-scooters under the Chetak brand, e-rickshaws under the Gogo brand, and also manufactures small e-bikes for EV company Yulu. While the drama at the Bajaj call was playing out, about 20-30 grim-faced representatives from the automotive industry huddled together in a conference room on the first floor of Udyog Bhawan in New Delhi. They had assembled there at short notice to discuss the challenges posed by the rare earths crisis with the union government's secretary of heavy industries. The executives warned that their production lines, which churn out about 6% of India's GDP, could grind to a halt within weeks if China did not resume the supply of rare earth materials, including permanent magnets and electronic components. EVs were particularly vulnerable to the supply chain crisis, they warned. The meeting ran into the evening. In the end, the heavy industries secretary assured the executives that he would take the matter up with his counterpart in the foreign ministry. For India's automobile industry, particularly the EV segment, the Chinese restrictions are a clear and present danger. They threaten to derail the government's ambitions making the country an electric vehicle manufacturing hub, an aspiration on which it has bet over ₹60,000 crore through various promotion schemes over the last six years. But the rare earths crisis is not the sole reason automakers who have invested billions of dollars in this technology have become nervous. They have also been hobbled by myriad other factors, such as cumbersome procedures and stringent eligibility criteria for aid programmes. Amid all this, the fact that EV adoption in India has not reached the levels they envisioned is adding to their anxiety. EVs accounted for less than three out of every 100 cars and about six out of every 100 two-wheelers sold in India in FY25, according to Hemal Thakkar, senior practice leader and director at Crisil Intelligence. 'This is relatively below the estimates the industry had made two-three years ago," he said. An industry report from 2021 prepared by Catapult, a clean transport promotion agency, predicted that electric two-wheeler penetration would reach 15% by 2025 while passenger vehicle penetration would be at 5%. Consequently, some legacy automakers have begun questioning their decision to bet on the technology. 'Globally, electric vehicle adoption has slowed down. In that background, there is a realization that we need to de-risk. All eggs in one basket may not be the right approach," said a top executive at a domestic carmaker. He didn't want to be identified. In a letter to the ministry of heavy industries, on 4 June, Rajan Wadhera, former president of the Society of Indian Automobile Manufacturers, called for a diversified approach. 'Pursuing an aggressive EV-only strategy without securing robust and diversified supply chains may inadvertently deepen our strategic dependence on a nation that has often taken positions adverse to India's geopolitical and economic interests," he wrote. 'India is uniquely positioned to harness alternative technologies like biofuels, strong hybrids, CNG, LNG, and even hydrogen," he added. Mint takes a look at each of the issues plaguing the EV industry and how they have played a role in sparking the existential crisis it faces today. Rare earth, common challenge The world has US President Donald Trump to thank for the Chinese action on rare earths. The Communist regime imposed export restrictions on seven rare earth elements in retaliation for the 145% tariffs the US had slapped on China, escalating the trade war between the two sides. In India, the impact of China's curbs became even more real on Tuesday (10 June), when news agency Reuters reported that Maruti Suzuki, a late entrant in the EV market, had slashed production targets for the e-Vitara, its first electric vehicle, by two-thirds because of the rare earths shortages. A spokesperson for Maruti Suzuki said that while the situation was uncertain, there has been no disruption to operations so far due to the rare earth crisis. The other companies making four-wheeler EVs, and likely to be affected, are Tata Motors, Mahindra and Mahindra, MG Motor, Kia and Hyundai. The two- and three-wheeler EV segment includes Ola Electric, Bajaj Auto, TVS Motor, Hero Motocorp, Greaves Electric and the Murugappa Group. 'Currently Mahindra has inventory for the affected parts to meet production needs. We are actively de-risking our supply chain…We are closely collaborating with our suppliers to ensure there is no disruption to production," said a Mahindra and Mahindra spokesperson. Two weeks on from the meeting in Udyog Bhavan, little progress has been made to mitigate the crisis. About 30 applications from Indian automotive companies for a licence to access rare earth magnets await clearance from the Chinese authorities, according to two people directly aware of the matter. A delegation of the automotive industry is waiting with packed bags to visit China, they said, but authorities from the Middle Kingdom are yet to grant them an appointment. Meanwhile, top political leaders from the West including US President Trump, have held talks with the Chinese political leadership and wrangled concessions. On Tuesday, the US and China reached an agreement on a framework that will ease trade tensions and that may help in resuming exports of rare earth magnets. But, there is no guarantee of supply to Indian automakers. 'This is a major supply chain disruption," said Rajat Mahajan, partner and automotive sector leader at Deloitte India. If the crisis escalates, could this deter investments in EVs? Mahajan thinks so. 'This situation will hopefully get resolved via diplomatic channels, but if it continues then we may see a shift towards other powertrains for large original equipment manufacturers (OEMs)," he added. The dependence on China is not only for rare earths, which go into the electric motor. The world also relies on India's neighbour for lithium-ion batteries, which power EVs—China controls about 80% of the global supply of these batteries. This over-reliance on one source for critical components is making automakers jittery. 'The dependence on China has now been outed as a vulnerability for the entire ecosystem. It is going to have a damaging effect on the industry's thinking on EVs," said Abhishek Saxena, a former policy expert at Niti Aayog. Electric vs. hybrid Another issue that has caused much heartburn in the Indian EV industry is the apparent shift in policymakers' perception of hybrid vehicles, which combine a gasoline-powered engine and electric motor and have far lower emissions than ICE vehicles. A pure electric vehicle is only powered by batteries. China's control over key EV inputs, and the crippling impact any curbs can have on production in India, will make policymakers proceed cautiously, as the government will not be willing to give the Chinese the upper hand. And that may be good news for hybrid makers, who have long sought to be treated at par with EV companies. Currently, Maruti Suzuki, Toyota Kirlosokar and Honda are the only companies offering hybrid vehicles in India. While the government has always maintained that it supports all technologies, companies that invested in EVs took comfort from the fact that it was only zero emission vehicles that enjoyed sops under the production-linked incentive scheme for the sector, indicating a policy preference. For hybrid makers, another huge bone of contention was the 5% goods and service tax rate on EVs, against the effective tax rate of 43%, including compensation cess, on hybrids. Union heavy industries minister H.D. Kumaraswamy, whose ministry oversees most of the incentive schemes for the automotive sector, reiterated to this publication last week that the government supports all technologies, including EVs, hybrids, compressed natural gas (CNG), liquified natural gas (LNG) and biofuels. That statement rankled the makers of electric cars. Two weeks earlier, a gaggle of senior executives from automakers, including senior executives of Tata Motors, Mahindra and Mahindra, Hyundai Motor India and JSW MG Motor India—companies that have gone into EVs in a big way—had met with minister Kumaraswamy. The reason for that meeting: concerns that hybrid vehicles were being given equal footing with EVs in government policy. Two executives who attended the meeting told Mint that the heavy industries minister had allayed their concerns. But his subsequent remarks induced a fresh bout of anxiety. Queries emailed to minister Kumaraswamy's office did not elicit a response. But it isn't just the central government alone that is making EV makers incontinent. On 22 April, the country's top automakers were asked to submit their comments on the national capital's draft electric vehicle policy proposal. One clause in that document sent EV carmakers into a tizzy—it proposed waiving registration and road fees for both electric vehicles and hybrids, effectively equating their positive impact on the climate. On 2 May, an advisory issued by the Commission for Air Quality Management (CAQM) for the National Capital Region asked government departments in the region to procure clean vehicles, which included hybrid vehicles along with EVs, CNGVs and others. One paragraph of the advisory especially caught the attention of the pure electric vehicle lobby. 'Strong Hybrid Electric Vehicles (SHEV) offer substantial improvements in fuel efficiency and emission reduction as compared to conventional diesel/petrol vehicles," the advisory read. The Tatas and Mahindras are concerned that official endorsements and incentives to hybrids could drive prospective EV buyers towards this technology, risking their investments. Automakers have publicly disagreed over policy support for EVs and hybrids. Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said in a written statement to Mint that the company believes government incentives should be directed toward technologies that require support to bridge a funding gap and accelerate innovation. 'Incentives are most effective when they help emerging technologies reach scale and maturity—particularly those that contribute meaningfully to long-term sustainability goals of zero emissions, such as EVs," Chandra said. Although it has taken baby steps towards the EV lane, Maruti Suzuki is on the other side of the debate. Rahul Bharti, senior executive officer of corporate affairs at Maruti Suzuki, told Mint that EV penetration in India is currently less than 3%. 'While all efforts are to maximize this 3%, we cannot say we will do nothing about the balance 97%," said Bharti. He added that the purpose and effect of strong hybrids is to replace pure diesel or petrol vehicles because they increase energy efficiency by 36-44% and reduce CO2 by 25-31% over petrol vehicles. But those who have invested in the new technology for years believe that incentivising hybrids, which have tailpipe emissions, will discourage further investments in EVs. 'Equating hybrids and EVs for disbursal of incentives is effectively disincentivizing investments into EVs. If the goal is to transition to cleaner technologies, it doesn't make sense to give both EVs and hybrids incentives. The government should back one technology," a senior executive at a carmaker said. Queries emailed to Hyundai Motor India, Toyota Kirloskar Motor, JSW MG Motor India, Kia Motors India, Bajaj Auto, TVS Motor, Ola Electric and Ather Energy did not elicit a response. A Pyrrhic victory? Meanwhile, the flagship production-linked Incentive (PLI) scheme for the automotive sector is struggling to deliver on its stated objective: to foster a domestic manufacturing ecosystem. The scheme, with a fiscal outlay of ₹25,938 crore, got the union cabinet's nod in September 2021. The money was to be disbursed over the following five fiscal years to automakers and component makers in an effort to incentivize investments in the EV ecosystem. One of the goals of the scheme was to facilitate deep localization, and thereby avoid situations like the one playing out now, where auto manufacturing lines risk coming to a halt because China has restricted exports of one component. The ministry of heavy industries, which oversaw the scheme, focused on making the rules airtight so that no company could game the system and take taxpayer money without adding sufficient value domestically. There was a minutely detailed standard operating procedure (SOP) for every applicant company to declare its domestic value addition. The ministry's cautious approach is understandable, as another scheme, Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME-India), saw many companies take subsidies from the government while selling vehicles largely imported from China. This time around, the ministry appears to have succeeded in preventing companies from gaming the system. But it's a Pyrrhic victory—of the 115 applicants, only four have managed to receive incentives as of 2024-25. Out of the total kitty of ₹25,938 crore, only ₹322 crore have been disbursed, as per government disclosures. The government also recently halved the incentives given to electric vehicle sellers under the Prime Minister e-Drive scheme. Another PLI scheme for cells used in EVs is yet to take off. In private conversations, automakers blame the cumbersome application process of the flagship PLI scheme for its low disbursal level. Industry observers agree that the confusion over subsidies should be cleared to help automakers plan their products better. 'Long-term policy clarity on subsidies, though on a reducing basis, will lead to the industry making investments in product development," Crisil's Thakkar said. Most of all, says Saxena, the former Niti Aayog member, the ambiguity over EV adoption needs to end. 'The concern over China's dominance of supply chains and slow adoption of vehicles is weighing on policymakers and the corporate sector," he said. 'However, there is no technology with zero tailpipe emissions like EVs that can be scaled up for mass use for now. All the stakeholders have to choose whether to back it or not." For now, automakers have not publicly indicated a change in stance. But the rumblings within their strategy rooms should set alarm bells ringing in the corridors of power.
Time of India
4 hours ago
- Time of India
Bridgestone India opens new Select store in Tirupati, strengthens retail network in Andhra Pradesh
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Time of India
6 hours ago
- Time of India
Rare earth magnets: Industry exploring lighter metals, reworking production schedules as govt weighs PLI
HighlightsChina's export halt hits EV supply chains; rare earth magnet stocks may last only till mid-July. Bajaj Chetak halts production briefly, Ather and TVS warn of disruptions; Hero, Tata, MG unaffected so far. OEMs explore stopgap options like importing motors or redesigning magnet-free systems, but face challenges. Govt mulls PLI scheme, mining boost, but solutions likely to take time. The US reached an agreement with China for uninterrupted supplies of rare earth magnets last night, but Indian OEMs will likely have to wait longer. Rare earth elements like samarium, gadolinium, terbium, dysprosium, and lutetium are essential for making permanent magnet synchronous motors (PMSMs), which is a key component for electric vehicles (EVs) and hybrids. These motors are also used in electric power steering and other auxiliary systems in internal combustion engine (ICE) vehicles. Since April four this year, China - which accounts for an overwhelming 80% of rare earth magnet supplies for Indian automobile OEMs - has stopped approvals for exports of this critical component. While negotiations are happening between the two governments, as per industry sources, on easing the export curbs from China, there is no light at the end of the tunnel yet. A component industry leader said supplies of rare earth magnets 'are precariously low with component manufacturers. The situation remains the same (despite the US getting a reprieve) and no Indian company has been given a license for importing these magnets yet. We are keeping our fingers crossed and hoping for the best'. We will start seeing production challenges very soon. With US, it was a trade issue but with India, China has a geopolitical issue which is yet to be veteran Another industry veteran said 'we will start seeing production challenges very soon. With US, it was a trade issue but with India, China has a geopolitical issue which is yet to be resolved.' A prominent dealer, of several brands across passenger vehicles and two wheeler categories, said that Bajaj Auto may be suspending production of its electric vehicle (EV) brand Chetak for a week, till June 17. 'This may be partially due to the rare earth magnet issue and also due to some design changes they are introducing. We were told that there is no production between June 11 and June 17,' he said. This dealer also indicated that Ather Energy , a pure play electric two wheeler brand, has stocks of the rare earth magnets for only a month more. Neither Bajaj nor Ather confirmed these developments. Also read: Maruti Suzuki denies operational impact amid rare earth magnet concerns The dealer quoted above also said that Hero MotoCorp (which sells VIDA electric two wheelers) has not indicated any production schedule changes as of now. But TVS Motor Company has already warned of production disruptions and even price increases due to the rare earth magnet supply issue beginning next month. According to CRISIL, Indian auto component manufacturers/ OEMs are exploring several options to mitigate the risks posed by rare earth magnet supply disruption. These include (a) importing fully assembled motors from China, (b) shipping the rotors, on which the rare earth magnets are mounted, to China for magnet assembly and then re-importing the assembled rotors, (c) substituting rare earth magnets with alternatively engineered materials aimed at achieving similar magnetic performance as rare earths without crossing the threshold that would classify them as rare earth magnets, (d) introducing rare earth magnet-free motors and instead switching over to motors that rely on electromagnets or other inductive mechanisms. These workarounds, however, come with logistical, regulatory and engineering complexities. Implementing some of the above alternatives would also involve accelerating the development, testing, and validation cycles to minimise production disruptions. Magnet issue blessing in disguise? But, for the passenger vehicle internal combustion engine industry, the rare earth magnet supply issue may have come as a blessing in disguise. The PV ICE vehicle dealers are currently bearing inventories of up to 50 days, double the normal level. So any potential disruption in production of ICE passenger vehicles is unlikely to bother the industry in the short term. But for electric PV OEMs, there is reason to worry. While Tata Motors, MG and Mahindra & Mahindra - three of the biggest OEMs for electric PVs - have not indicated any impact of the supply issue till now, industry experts expect these OEMs to be under pressure in the coming weeks if the magnet supply issue is not resolved. Maruti Suzuki India , which expects to shortly launch its first electric vehicle, has said that while there is no disruption in operations as of now due to the rare earth magnet supply issue, 'there is a lot of uncertainty, the situation is continuously evolving'. Heavy rare earth magnets are better performance as compared to less heavy rare earths. If the latter are used, each electric vehicle will need more magnets to achieve the same level of Thakkar Hemal Thakkar , Senior Practice Leader and Director at Crisil Research, pointed out that for electric two wheeler OEMs, while value wise the magnets account for negligible share of just Rs 150-200 per vehicle, this tiny part is indispensable. He also explained that while the present constraint in supplies from China applies to specific rare earths, alternatives can be developed. 'Heavy rare earth magnets are better performance as compared to less heavy rare earths. If the latter are used, each electric vehicle will need more magnets to achieve the same level of performance. This will also mean more space is needed for the magnets, ultimately needing a redesign of the electric motor. All this will take time, at least a couple of months. So alternatives can be found but not immediately'. Industry wants govt intervention As the automobile industry seeks meaningful intervention from the government, there are indications that the Ministry of Heavy Industries is looking at an incentive plan to boost domestic production on rare earth magnets through fresh production linked incentive ( PLI ) scheme. Plans are also afoot to improve domestic availability of critical minerals through increased mining through state owned firms. Also read: Rare-earth magnet supply concerns may disrupt auto production by July: ICRA There is also some talk of letting the private sector explore rare earths. While the intent is supportive, the operationalisation of these plans will take time. Thankkar of Crisil Research said that 'The PLI initiative is a good move but this will take some time to be implemented, since interministerial consultations etc are needed'. Also, some Indian companies are exploring ways to build magnet free motors. So while the OEMs are looking for various options, it is for the governments of the two countries to resolve the matter quickly. Otherwise India's green ambitions may take a temporary hit.
