Auto PLI boosted the e2W domestic market, not exports: C-DEP

New Delhi: The auto PLI program has accelerated production scale among approved electric two-wheeler manufacturers, but it has significantly changed the competitive dynamics, with cost advantage being used to capture domestic market share instead of building export-ready platforms, think tank Center for Digital Economy Policy Research said on Friday. Non-PLI electric two-wheeler (e2W) manufacturers experienced a sharp market contraction, with growth declining from (+ve) 407 per cent in FY22 to (-ve) 33 per cent in FY24, and further declining to (-ve) 11 per cent in FY25 after the rollout of the programme, the Center for Digital Economy Policy Research (C-DEP) said in a statement.

PLI-approved OEMs enjoy a cost advantage of an estimated 13-16 percent, enabling more aggressive pricing and faster capacity expansion, the company said.

C-DEP has released a report warning that “this cost differential has distorted the market structure, allowing PLI beneficiaries to steadily capture their domestic market share while marginalizing innovation-led players that played a formative role in the early market development.”“Although the auto-PLI program aimed to increase export competitiveness, the data shows a stark contrast between the export performance of PLI-approved models and non-PLI models,” the report said, adding that 77 percent of India’s electric two-wheeler exports are powered by non-PLI models, while PLI-approved models account for less than a quarter of total exports despite having a cost advantage of 13 to 16 percent enjoyment.

Commenting on the findings, C-DEP chairman Jaijit Bhattacharya said: “Our analysis indicates that the current design of the auto PLI programme, while beneficial for scaling up production, inadvertently penalizes innovation-driven companies that invest heavily in R&D and new technologies.”

A policy framework that focuses solely on risks of scale undermines the long-term competitiveness of the sector and the potential for India to lead the world in advanced clean mobility technologies, he added. The C-DEP report flagged the risk of India losing key traditional two-wheeler export markets, including Nepal, parts of Latin America and Africa, to Chinese EV makers like Yadea and Sunra, as non-PLI manufacturers come under pressure domestically.

“Without production-related support, these innovation-led entities face higher capital requirements, limited access to venture capital and structural disadvantages during scale-up, potentially weakening India’s technological depth in the long term,” the report said.

The report noted that by December 2025, only Rs 2,321.94 crore had been disbursed against a cumulative target of Rs 3,754 crore – only 9 per cent of the total expenditure had been disbursed against an expected 14.47 per cent.

It recommended opening a targeted window for innovation-led OEMs that demonstrate strong localization depth by complying with PM E-DRIVE’s Phased Manufacturing Program (PMP), while also proposing a first-come, first-served mechanism to prevent inactive players from hoarding approvals and fiscal space.

It also called for periodic performance reviews to exit non-performing beneficiaries and efficiently redistribute fiscal space.