Electric journey helps Tata Motors, Mahindra become first to win auto PLI

Tata Motors Ltd and Mahindra and Mahindra Ltd on Thursday became India's first automakers to secure production incentives for the automotive sector, marking a key moment for the scheme that had a tepid start.

The two companies have received approval for claims worth ₹246 crore under the Production-Linked Incentive (PLI) Auto scheme, the heavy industries ministry said.

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Mahindra and Mahindra's Last Mile Mobility business won approval for incentives based on sales of its electric three-wheelers, while Tata Motors received the same for the Tiago EV electric car, Starbus EV electric bus, and electric cargo vehicle Ace EV.

"The total claims from these two applicants amount to approximately ₹246 crore, which have been examined and recommended by the Project Management Agency (PMA) and subsequently approved by the Ministry of Heavy Industries (MHI)," said a statement from the ministry of heavy industries.

Policy momentum

This is the scheme's first disbursement since it was launched in 2022, offering a critical financial boost for two of India's leading green mobility players. This milestone comes as India pushes to position itself as a global EV manufacturing hub, though the scheme has had a slow start. On 15 November, Mint reported that claims for FY24 were modest at ₹500 crore from four applicants, with the bulk of submissions from electric two- and three-wheeler manufacturers.

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Tata Motors had sought incentives worth ₹ 142.13 crore and Mahindra & Mahindra claimed ₹ 104.08 crore, based on their determined sales values for FY24, the ministry statement said. The claims submitted by the two represent a substantial portion of the total submissions for FY24. Besides the two automakers, Ola Electric and Toyota Kirloskar Auto Parts had also submitted claims for FY24, two people aware of the matter said.

Mahindra's claims are based on sales of advanced automotive technology (AAT) which the PLI incentivizes worth ₹800.59 crore, with a cumulative investment of ₹978.30 crore, the statement said. "The eligible sales from their e3W models—including Treo, Treo Zor, and Zor Grand—amount to ₹836.02 crore, supported by a certificate of DVA issued by the Automotive Research Association of India (ARAI)," the statement added. Similarly, Tata Motors' eligible sales of AAT total ₹ 1,380.24 crore, the MHI statement said.

Advanced tech, local value

The PLI-Auto scheme, which boasts a ₹25,938 crore outlay, aims to incentivize the production of advanced automotive technologies, including electric and hydrogen fuel-cell vehicles. However, its adoption has been measured so far. Yet, larger incentives are anticipated in the coming years as more locally manufactured electric cars and larger vehicles enter the market, industry executives said.

“Disbursements for FY24 mark an important moment for the scheme,” an official said on the condition of anonymity. “We expect exponential growth in claims by FY26 as more products meet certification criteria, eventually utilizing the entire fund allocation by FY28.”

Green drive

The approvals for Tata Motors and Mahindra come after a rigorous review of their claims. Manufacturers must secure certificates on domestic value addition, and must prove that at least 50% of the components used in building the vehicle were manufactured domestically. This is because the scheme aims to promote indigenous manufacturing of automobiles and automotive components.

Tata Motors, India’s dominant electric passenger vehicle maker, and Mahindra, which is a leading electric three-wheeler maker, have both been aggressive in scaling their green mobility strategies.

Queries emailed to Tata Motors, Mahindra and Mahindra, and the heavy industries ministry remained unanswered.

The scheme’s slow start, however, has not dampened optimism among industry stakeholders. Experts believe these initial payouts signal the government’s commitment to incentivizing local manufacturing and building a robust EV ecosystem.

The government will start crediting incentives under the ₹26,000 crore production-linked incentive scheme for automobiles and auto components from FY25, the ministry had said in a written reply to Parliament in December last year.

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Union minister of heavy industries HD Kumaraswamy congratulated the two automakers and affirmed that more applicants who have obtained DVA certificates of at least 50% under the PLI-Auto scheme will soon commence production of automobiles and auto components in India, the statement said.