Tried many ways to increase permgen size but no luck.
I am using following configuration in my pom
<plugin>
<groupId>org.apache.maven.plugins</groupId>
<artifactId>maven-surefire-plugin</artifactId>
<version>2.18.1</version>
<configuration>
<includes>
<argLine>-Xmx512m -XX:MaxPermSize=512m -XX:PermSize=216m</argLine>
</includes>
</configuration>
</plugin>
Tried "set MAVEN_OPTS=-Xmx512m -XX:MaxPermSize=128m" in command line, no luck as well.

Your configuration is slightly incorrect. You don't need the <includes> element, <argLine> should be directly under <configuration>.
<plugin>
<groupId>org.apache.maven.plugins</groupId>
<artifactId>maven-surefire-plugin</artifactId>
<version>2.18.1</version>
<configuration>
<argLine>-Xmx512m -XX:MaxPermSize=512m -XX:PermSize=216m</argLine>
</configuration>
</plugin>
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