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 FAME-2, 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.

The country's most populous state Uttar Pradesh did not win any buses under the schemes while Bihar won only 400 buses. The contribution of these states is important to note given their large population and high dependence on public transport.

Meanwhile, Arunachal Pradesh, Goa, Himachal Pradesh, Manipur, Dadra & Nagar Haveli and Daman and Diu all have received only 50 e-buses each, with Ladakh receiving 48, and Andaman & Nicobar getting 45, the data showed.

Tenders under these central schemes assume importance as these state-run buses will ply on Indian roads for at least the next decade, since these are long-term contracts. The first PM E-Drive tender for 10,900 e-buses closed in November 2025, while the second for 2,900 e-buses closed in April this year.

With procurement largely complete, the spotlight now shifts to ensuring these buses operate at full capacity safely for the 10–12 year duration of these long-term contracts, according to domain experts.

Shyamasis Das, who heads the electric mobility research vertical at New Delhi-based think tank Centre for Social and Economic Progress, said the next step is ensuring that these buses do not run empty, and people choose public transportation over private vehicles.

“This can be done by effective route planning, as many existing routes are based on old commuter data. The patterns of origin-to-destination (OTD) should cater to demand of consumers, along with ensuring that different modes of public transport complement each other,” he said.

Queries emailed to the union ministries of heavy industries and housing and urban affairs, and state transport departments of Karnataka, Maharashtra, and Delhi as well as other states on 20 May remained unanswered.

Two funding models

The funding structure is also shaping how the transition unfolds. PM E-Drive scheme provides an upfront subsidy of 20-35% of the cost of an e-bus, while the PM E-bus Sewa covers a significant portion of the per-kilometre operating cost of each bus, based on its size.

The ministry of heavy industries said in March that 6,228 e-buses under the PM E-bus Sewa scheme had been tendered in a written parliamentary response. Another 3,604 e-buses will be tendered by 5 June this year under the PM E-bus Sewa scheme, according to a tender floated by the government’s clean energy agency Convergence Energy Services Ltd.

E-bus manufacturing incumbents Tata Motors and Ashok Leyland have lost footing in the tenders under these two central government schemes, which has been taken up by relatively new manufacturers such as Pune-based EKA Mobility and Gurugram-based PMI Electro, Mint reported on 13 May.

Push into private fleets

The Centre is turning to its next phase of electric mobility support, focusing on reducing the upfront cost of privately-run electric buses and trucks.

Heavy industries minister H D Kumaraswamy held consultations with e-bus and e-truck makers, operators, financiers and industry bodies on 20 May to identify rollout challenges, according to a ministry statement.

The ministry said on 29 April that it was working on a scheme to improve financing for private operators through loan guarantees and interest subvention, as electric buses and trucks cost about 2–2.5x more than diesel counterparts.

Mint reported first on 4 January that such a scheme was in the works, and could be launched in the next 6-12 months.

“Support for private sector fleets, including school and institutional buses, can help accelerate electric bus adoption in India, deliver significant air quality and climate benefits, and reduce dependence on fossil fuels,” said Amit Bhatt, India managing director of the International Council on Clean Transportation, a global think tank.

Infrastructure bottlenecks

Even as e-bus sales in India rose 37% year-on-year to 5,356 units in FY26, a crucial hurdle in the rollout of these buses was the lack of infrastructure readiness, particularly unpreparedness for e-bus chargers at depots.

Mint reported earlier in November 2025 that the country’s largest ever e-bus tender of 10,900 buses under the PM E-Drive scheme was delayed due to lack of necessary infrastructure at bus depots.

The last leg of India’s ongoing central government e-bus push comes at a time when the total cost of owning a diesel bus and an electric bus has already reached parity, provided that electric buses run 150 km every day, according to a report by consultancy firm KPMG in May 2026. This distance will be lowered to 120 km as battery prices fall and petroleum-based fuel prices rise, the report said.