Union Budget 2026: PLI Auto allocation doubled to Rs 5,940 crore; battery scheme sees steep cut
PLI scheme for Advanced Chemistry Cells (ACC) has seen a 44% drop in allocation from Rs 155.76 crore in FY26 to Rs 86 crore in FY27
- Feb 1, 2026,
- Updated Feb 1, 2026 6:08 PM IST
The Union Budget 2026 has doubled the allocation for the production-linked incentive (PLI) scheme for Auto and Auto Components to Rs 5,940 crore for 2026-27 from Rs 2,818.85 crore budget estimate in FY26. The revised estimate for FY26 stands at Rs 2,091 crore.
The Rs 25,938 crore PLI Auto scheme was envisaged to boost domestic manufacturing of advanced automotive technology products with a focus on battery electric vehicles and hydrogen fuel cell vehicles. While PLI Auto scheme has seen a jump in budgetary allocation, another PLI scheme for battery cells has seen a steep cut in outlay.
The government’s Rs 18,100-crore PLI scheme for Advanced Chemistry Cells (ACC) to promote battery cell localisation has seen a 44.5 percent cut in allocation from Rs 155.76 crore in FY26 to Rs 86 crore in FY27. The revised estimate for FY26 was Rs 13.31 crore as only one battery cell maker, Ola Electric, has commenced commercial operations.
As of October 2025, only 2.8% (1.4GWh) of the targeted 50GWh capacity has been commissioned within the stipulated timeline, entirely by Ola Electric. Of the 40GWh allocated so far under ACC PLI, Reliance New Energy is the only beneficiary that has indicated commissioning its second-round award capacity (10GWh) on time, shows a report by JMK Research and Institute for Energy Economics and Financial Analysis (IEEFA).
The total capacity awarded under the scheme stands at 40 GWh, distributed among four beneficiary companies, out of the 50 GWh on offer. In the first bidding round held in March 2022, three firms—Reliance New Energy, Ola Electric Mobility and Rajesh Exports—were collectively awarded 30 GWh. Ola Electric received the largest share in that round, securing 20 GWh. Ola Electric plans to commission 5GWh of its 20GWh by March 2026. “However, Ola’s decision to limit its capacity to 5GWh until FY2029 dilutes the commitments the scheme envisions,” the report says.
Beneficiaries have faced significant supply chain and implementation bottlenecks, such as the stringent domestic value addition (DVA) requirements, an aggressive two-year installation timeline, and visa approval delays for Chinese technical specialists needed for equipment installation, leading to delays in commissioning capacity, the report notes.
For the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme, the Union Budget 2026 has earmarked Rs 1,500 crore for FY27, down 62.5 percent from Rs 4,000 crore budgeted in FY26. To be clear, the revised estimate for the PM E-DRIVE scheme in FY26 stood at Rs 1,300 crore.
The Union Budget 2026 has doubled the allocation for the production-linked incentive (PLI) scheme for Auto and Auto Components to Rs 5,940 crore for 2026-27 from Rs 2,818.85 crore budget estimate in FY26. The revised estimate for FY26 stands at Rs 2,091 crore.
The Rs 25,938 crore PLI Auto scheme was envisaged to boost domestic manufacturing of advanced automotive technology products with a focus on battery electric vehicles and hydrogen fuel cell vehicles. While PLI Auto scheme has seen a jump in budgetary allocation, another PLI scheme for battery cells has seen a steep cut in outlay.
The government’s Rs 18,100-crore PLI scheme for Advanced Chemistry Cells (ACC) to promote battery cell localisation has seen a 44.5 percent cut in allocation from Rs 155.76 crore in FY26 to Rs 86 crore in FY27. The revised estimate for FY26 was Rs 13.31 crore as only one battery cell maker, Ola Electric, has commenced commercial operations.
As of October 2025, only 2.8% (1.4GWh) of the targeted 50GWh capacity has been commissioned within the stipulated timeline, entirely by Ola Electric. Of the 40GWh allocated so far under ACC PLI, Reliance New Energy is the only beneficiary that has indicated commissioning its second-round award capacity (10GWh) on time, shows a report by JMK Research and Institute for Energy Economics and Financial Analysis (IEEFA).
The total capacity awarded under the scheme stands at 40 GWh, distributed among four beneficiary companies, out of the 50 GWh on offer. In the first bidding round held in March 2022, three firms—Reliance New Energy, Ola Electric Mobility and Rajesh Exports—were collectively awarded 30 GWh. Ola Electric received the largest share in that round, securing 20 GWh. Ola Electric plans to commission 5GWh of its 20GWh by March 2026. “However, Ola’s decision to limit its capacity to 5GWh until FY2029 dilutes the commitments the scheme envisions,” the report says.
Beneficiaries have faced significant supply chain and implementation bottlenecks, such as the stringent domestic value addition (DVA) requirements, an aggressive two-year installation timeline, and visa approval delays for Chinese technical specialists needed for equipment installation, leading to delays in commissioning capacity, the report notes.
For the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme, the Union Budget 2026 has earmarked Rs 1,500 crore for FY27, down 62.5 percent from Rs 4,000 crore budgeted in FY26. To be clear, the revised estimate for the PM E-DRIVE scheme in FY26 stood at Rs 1,300 crore.