Compliance watch-outs
Value addition is tested variant by variant
PLI-Auto pays only on products with at least 50% domestic value addition. Certification is not company-wide: each model or component variant needs its own DVA certificate before a claim. By 31 December 2025, 8 Champion OEMs held DVA certificates for 94 variants and 10 Component Champions for 37 (PIB, MHI Year End Review, 13 Jan 2026). A variant without a certificate earns nothing, however much of the company’s output is localised.
Land-border owners anywhere in the chain
A beneficial owner from a land-border country above 10%, or with control, brings the investment under the government route; up to 10% without control needs prior reporting on the FIF portal (DPIIT Press Note 2 (2026)). The test follows ownership through the whole chain, so a fund or holding company with such an owner can change the route. See land-border investors.
UK quota imports need DGFT certificates
CETA rates need a DGFT TRQ certificate, valid 12 months and not transferable, and a UK certificate of origin. Only OEMs and their authorised dealers may apply (Business Standard, Jul 2026). Imports outside the quota pay the standard rates of up to 110%.
EPR for end-of-life vehicles
The End-of-Life Vehicles Rules 2025 (MoEFCC, S.O. 98(E), 6 January 2025) set mandatory scrapping targets for producers, covering vehicles sold in India and those put to self-use. The obligation starts with the first vehicle put on the market, including an importer’s.
PM E-DRIVE is fund-limited
Support for e-2W, e-3W, e-trucks, e-buses and e-ambulances runs to 31 March 2028, but a component closes early if its funds run out; all claims must be filed by 31 December 2027. Vehicles must meet the Phased Manufacturing Programme to qualify.
Rare-earth magnet supply
Carmakers have raised concern that import controls on rare-earth magnets make localisation conditions hard to meet (Sustainable Futures, August 2026). The ₹7,280 crore REPM scheme drew 20 bids by 12 August 2026, and the scheme allows a two-year build period before its five years of incentives on magnet sales.
Pitfalls stated elsewhere in the brochure
Assuming PLI-Auto is open to new entrants
PLI-Auto is limited to its 82 approved applicants and runs to FY2027-28. A new foreign entrant should build its case on PM E-DRIVE, state packages and cross-sector schemes such as the ELI instead.
Planning around SPMEPCI
The 15% import duty for e-4W makers committing ₹4,150 crore drew no applications by its October 2025 deadline, and the guidelines let MHI reopen the window only until 15 March 2026. As of 1 October 2026 it is closed.
Investing before the state application
Uttar Pradesh counts only projects with at least 80% of capital investment made after the policy’s effective date. Several state tiers also go only to the first projects to apply. Spending first and applying later can forfeit the package.
Relying on cell capacity that has been awarded but not built
Of the 50 GWh offered under PLI ACC, 40 GWh has been awarded but by January 2026 only Ola’s 1 GWh plant was built, in pilot production since March 2024. Battery cells remain a supply gap, and so do magnets.
Treating the EU FTA as in force
The India–EU FTA was agreed on 27 January 2026 but is not yet in force. Its 10% duty for 250,000 cars a year, and EV cuts after five years, are not available until it takes effect.
Expecting an EV duty cut under the UK CETA
The CETA cuts duty on UK petrol and diesel cars within quota; EVs get no cut for five years.
Assuming the 15% manufacturing tax regime
The s.201 regime is closed to companies that had not begun manufacturing or production by 31 March 2024. A new plant compares the 25.168% concessional rate with the normal regime; see tax and zones.
What to check next
- List every variant you plan to claim on and its DVA certification status.
- Run the beneficial-ownership test through the whole chain before choosing the FDI route.
- Confirm remaining PM E-DRIVE funds for your vehicle category with MHI before committing volumes.
- Plan magnet supply for the period before REPM plants produce.
- Follow recent changes and updates for scheme dates that move.