New Delhi: A plan to seek deeper localization details of parts under the auto PLI (production-linked incentive) scheme has put electric vehicle (EV) makers on edge, with experts saying it is difficult for companies to trace sourcing details beyond immediate suppliers, especially among micro enterprises further down the value chain.
As India dependence on imported oil amid geopolitical uncertainty, government testing agencies are seeking information on tier-IV and tier-V suppliers of EV makers that provide raw materials such as chemicals, granules and processed metals, according to three people aware of the matter.
Localization under the ₹25,938-crore PLI scheme and auto components is overseen by testing agencies such as Automotive Research Association of India (ARAI), International Centre for Automotive Technology (ICAT), Global Automotive Research Centre (GARC), and National Automotive Test Tracks (NATRAX).
Currently, automakers are required to provide sourcing and pricing details only for tier-I suppliers manufacturing advanced automotive technology (AAT) components, while those suppliers must disclose localization details of entities that supply to them, or tier-II and tier-III vendors.
“In some cases, the additional information sought by testing agencies involves sourcing of fundamental raw materials such as iron and steel,” one of the three people cited above said, requesting anonymity.
The second person said that industry lobby group Society of Indian Automobile Manufacturers (Siam) has discussed the issue for a potential representation to the government.
“Auto companies are already providing information on localization up to tier-III suppliers, and compliance under the PLI Auto scheme has been a long-drawn-out process,” said the second person.
Industry experts said extending localization checks to tier-IV and tier-V suppliers would be impractical.
“Tier-IV and tier-V suppliers are usually micro enterprises,” said Arun Malhotra, an auto industry veteran and former head of a Japanese automobile firm’s Indian operations.
“While it is understandable to check for misuse—like in the previous case under the FAME-2 scheme—more compliances will only lead to slower localisation in the EV value chain in India. There can be a watchful but pragmatic view on this issue,” Malhotra added.
Under , electric vehicle makers Hero Electric, Okinawa Autotech, and Benling India were removed from the subsidy scheme, and subsequently investigated by the Serious Fraud Investigation Office (SFIO) for flouting localisation norms and claiming subsidies worth ₹297 crore, the corporate affairs ministry said in December 2024.
Jaijit Bhattacharya, president, C-DEP Research, said that while past leakages make traceability important, monitoring lower-tier suppliers becomes increasingly difficult for OEMs.
“For instance, a manufacturer could have multiple tier-III suppliers for certain parts and raw materials, and it creates a geometric progression in keeping a check,” he added.
Under the PLI Auto scheme that was launched in 2021, 82 vehicle and auto parts manufacturers have qualified for incentives aimed at boosting domestic production of advanced automotive technologies.
The approved applicants include eight automakers—Tata Motors, Mahindra & Mahindra, Ola Electric, TVS Motor, Bajaj Auto, Volvo Eicher Commercial Vehicles, Pinnacle Mobility Solutions and Hero MotoCorp—that have been cleared to claim incentives for manufacturing electric two-wheelers, passenger vehicles, small commercial vehicles and buses.
Ten component makers, including Sona BLW Precision Forgings, have also received approvals.
Queries emailed to the spokespersons of the ministry of heavy industries, ARAI, ICAT, GARC, NATRAX, Siam, and the PLI Auto beneficiaries mentioned above remained unanswered till press time.
The tighter localisation scrutiny comes amid rising EV adoption in India. Total EV sales in India rose 16% in 2025 to 2.35 million from 2.02 million in 2024, the government’s Vahan data showed, with India emerging as a key market for electric two-wheelers, three-wheelers, and buses.
So far, the Centre has disbursed ₹2,378 crore under the PLI Auto scheme as of January 2026, according to a December 2025 heavy industries ministry statement. The allocated budgets were ₹3,500 crore for FY25 and ₹2,818 crore for FY26.
India has 14 PLI schemes with a corpus of ₹1.91 trillion for sectors such as electronics, pharmaceuticals, automobiles, batteries, white goods, and renewable energy, among others.
