Auto PLI Scheme Reshapes Electric Two Wheeler Market, Non PLI Makers See Sharp Contraction: C DEP Report

Production Gains Under PLI, But Market Dynamics Shift​

The auto Production Linked Incentive scheme has accelerated output among approved electric two wheeler manufacturers, but it has significantly reshaped competition within the sector. According to a report released on Friday by the Centre for Digital Economy Policy Research, the cost benefits under the scheme are being used primarily to gain domestic market share rather than to build export focused platforms.

The report noted that PLI approved original equipment manufacturers enjoy an estimated 13 to 16 per cent cost advantage. This has enabled them to adopt aggressive pricing strategies and expand capacity at a faster pace.

However, the think tank warned that this cost differential has altered the market structure. It said the benefits have allowed PLI beneficiaries to steadily capture domestic share while sidelining innovation driven players that played a formative role in the early development of the electric two wheeler segment.

Non PLI Manufacturers Face Steep Decline​

The data highlights a sharp contraction among non PLI electric two wheeler makers following the implementation of the scheme. Growth for these manufacturers dropped from 407 per cent in FY22 to negative 33 per cent in FY24, and further declined to negative 11 per cent in FY25.

Despite the cost edge enjoyed by PLI approved models, export trends show a contrasting picture. The report stated that 77 per cent of India’s electric two wheeler exports are driven by non PLI models. PLI approved models account for less than one fourth of total exports, even with a 13 to 16 per cent cost advantage.

Concerns Over Innovation and Export Competitiveness​

Commenting on the findings, C DEP President Jaijit Bhattacharya said the current design of the scheme, while beneficial for scaling production, inadvertently disadvantages companies investing heavily in research and development and new technologies.

The report cautioned that a policy framework focused solely on scale could undermine long term competitiveness and limit India’s ability to lead in advanced clean mobility technologies.

It also flagged the risk of India losing traditional two wheeler export markets such as Nepal, parts of Latin America, and Africa to Chinese electric vehicle manufacturers including Yadea and Sunra. The pressure on non PLI manufacturers in the domestic market could weaken their global positioning.

Low Disbursal and Policy Recommendations​

As of December 2025, only ₹2,321.94 crore had been disbursed against a cumulative target of ₹3,754 crore. This represents 9 per cent of the total outlay, compared with an expected 14.47 per cent.

The report recommended opening a targeted window for innovation led OEMs that demonstrate strong localisation depth by complying with PM E DRIVE’s Phased Manufacturing Programme. It also suggested adopting a first come first serve mechanism to prevent inactive players from holding approvals and fiscal space.

Further, it called for periodic performance reviews to remove non performing beneficiaries and reallocate fiscal space more efficiently, aiming to strengthen the long term technological depth of India’s electric two wheeler industry.