Ather Energy cofounder and CEO Tarun Mehta has criticised the government’s stance on excluding startups from the production-linked incentive (PLI) scheme for automobiles and auto components, arguing that the current framework risks undermining India’s EV ambitions.

His remarks came after a senior government official told ET Auto that PLI schemes are “not meant for startups but for global champions”, effectively ruling out the inclusion of electric-first OEMs. 

Notably, the existing auto PLI scheme, overseen by the Ministry of Heavy Industries, mandates steep eligibility thresholds, including ₹10,000 Cr in global automotive revenue and ₹3,000 Cr in fixed assets, criteria for auto OEMs, which most EV startups fail to meet.

In a post on social media platform X, Mehta said he finds it “hard to believe” that policymakers would intentionally exclude startups at a time when India’s EV ecosystem has been significantly shaped by electric-first companies. 

Over the past decade, he said, startups have invested heavily in product development, software, power electronics and localisation, often without the backing of legacy scale, helping build a “vibrant and dynamic” EV market.

He argued that many new-age EV companies today lead not just in innovation but also in volumes and market share across multiple segments. Mehta said Ather has invested thousands of crores in R&D and manufacturing, employs over 4,000 people directly, and has committed another ₹2,000 Cr towards a new greenfield facility in Maharashtra, all without PLI support.

Cost Disadvantage & Policy Mismatch

At the heart of Mehta’s critique is what he called a structural imbalance in the policy design. By prioritising legacy scale over EV-specific capabilities, the PLI scheme effectively places emerging manufacturers at a 13-16% cost disadvantage, he said.

This differential, according to Mehta, could shape long-term market outcomes by discouraging investments in innovation-led segments such as battery systems, indigenous platforms and software — areas where startups have been leading.

Further, Mehta urged policymakers to “calibrate” the PLI framework, suggesting more flexible eligibility norms aligned with R&D intensity and domestic value addition (DVA).

He also pushed back against the perception that startups lag in localisation, stating that DVA benchmarks are similar across both PLI and non-PLI players, with electric-first companies often leading indigenous development efforts.

The government, on other hand, has termed PLI for automobiles and auto components as a success, citing over ₹35,000 Cr in investments, production of nearly 14 Lakh EVs, and creation of close to 49,000 jobs. Major beneficiaries include legacy automakers such as Tata Motors, Mahindra & Mahindra and Maruti Suzuki, among others.

Shares of Ather were trading 0.40% lower at ₹935 on the BSE at 14:45 IST.

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