Budget 2026: Auto PLI Allocation Rises to ₹5,940 Crore, No Policy Change

Union Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2026–27, did not announce any new policy changes categorically for the Production Linked Incentive (PLI) scheme for the automobile and auto components sector. However, there has been a sharp increase in allocations for the scheme, signalling continued fiscal backing for advanced automotive manufacturing.

According to the Economic Survey 2026, the automobile industry provides direct and indirect employment to more than 30 million people and contributes nearly 15% of India's GST collections, underlining its fiscal and economic significance.

Also read: No Fireworks for Auto, but Some Fuel for EVs and Infrastructure

Auto PLI Allocation Nearly Triples YoY

Under the head Development of Automobile Industry, the Budget 2026–27 has earmarked ₹5,939.87 crore for the PLI Scheme for Automobiles and Auto Components. This marks a key rise compared with the Revised Estimate of ₹2,091.26 crore for 2025–26 and the Budget Estimate of ₹2,818.85 crore for that year.

For comparison, the actual expenditure under the scheme in 2024–25 stood at ₹325.35 crore, indicating that disbursements are expected to scale up significantly as more approved applicants meet investment and production milestones.

Also read: Budget 2026-27: Customs Duty Exemption Extended on Lithium-Ion Cell Manufacturing

Scheme Creates Nearly 49,000 Jobs

The auto PLI scheme, approved in September 2021 with a total outlay of ₹25,938 crore, targets Advanced Automotive Technology (AAT) vehicles and components. As of September 2025, it has attracted ₹35,657 crore in cumulative investment and generated 48,974 jobs, according to the Survey.

ACC Battery PLI Gets Modest Allocation Increase

The PLI scheme for Advanced Chemistry Cell (ACC) battery storage -- a key pillar of EV localisation -- has a Budget Estimate of ₹86.01 crore for 2026–27. This compares with a Revised Estimate of ₹13.31 crore for 2025–26 and an actual spend of ₹12.28 crore in 2024–25.

The ACC PLI scheme carries a total approved outlay of ₹18,100 crore and aims to establish 50 GWh of domestic battery manufacturing capacity. So far, 40 GWh has been awarded to selected firms.

The increased allocations reflect the government's expectation that PLI beneficiaries will ramp up production and investment activities, triggering higher incentive disbursements as performance milestones are achieved.