This paper presents an allocation planning approach to optimally allocate DSTATCOM to improve the operational performance of microgrids (MGs) with plug-in electric vehicle charging stations (PEVCSs). A two-stage optimisation problem is formulated for this. The first stage is used to minimise the total cost of MG to optimally design MG and the second stage is used to optimally allocate PEVCSs and DSTATCOM in MGs by minimising the operational performance index, which is a weighted sum of energy loss and voltage deviation indices. Differential evolution (DE) and particle swarm optimisation (PSO) algorithms are used to solve the MG design optimisation problem. An exhaustive search-based approach is also employed to show the impact of the placement of a PEVCS in sub-optimal locations (one at a time) of MGs on the operational parameters of MGs. A case study is also conducted with multiple placements of PEVCSs in MGs. The proposed approaches are validated on 33-bus, 69-bus and 52-bus Indian practical distribution networks. The results show that the placement of PEVCS in remote locations greatly deteriorates the operational parameters of MGs. With the optimal allocation of DSTATCOM, a significant reduction in the operational performance index of MGs with PEVCSs is observed.