In 2020, the Government of India launched the Production-Linked Incentive (PLI) Scheme, a major policy initiative to enhance the country’s manufacturing sector. The scheme is a major part of the government’s “Atmanirbhar Bharat” (Self-Reliant India) vision, which basically aims to make the India more self-sufficient, minimize dependence on the imports, create various jobs and also help to promote the advanced technology in the sector of manufacturing.
What is the PLI Scheme?
The PLI Scheme is basically a performance-based incentive program. Instead of giving fixed subsidies, it rewards the companies based on the increase in the sales of goods made in India. This encourages the businesses to produce more efficiently and effectively, expand their operations and help to focus on quality, as higher production and sales mean higher incentives.
Objectives of the PLI Scheme
The major goals of the PLI Scheme include:
- Boost Domestic Manufacturing – It helps to encourage companies to start or expand their manufacturing facilities in India.
- Reduce Import Dependency – It makes the products locally that were previously imported from other countries.
- Enhance Export Potential – Support the production of goods that can be exported globally.
- Generate Employment – Create more job opportunities across different sectors.
- Encourage Technology Adoption – Helps push companies to use advanced and modern manufacturing technologies.
Sectors Covered Under the PLI Scheme
The PLI Scheme started with three sectors but now covers 14 important sectors, including:
- Mobile phones and electronic components
- Pharmaceuticals and Active Pharmaceutical Ingredients (APIs)
- Medical devices
- Automobiles and auto components
- Specialty steel
- Telecom and networking products
- Textiles
- White goods like air conditioners and LEDs
- Food processing
- Drones and drone components
- Advanced Chemistry Cell (ACC) batteries
- IT hardware
- Bulk drugs
- Renewable energy (solar PV modules)
These sectors were chosen because they have high potential to boost India’s manufacturing and export capabilities.
Achievements and Impact
The PLI Scheme has already made a strong impact:
- Investment: It is around the ₹1.76 lakh crore (about $21 billion) has been invested across sectors.
- Production and Sales: Incremental production and sales have crossed ₹16.5 lakh crore.
- Employment: Over 12 lakh jobs have been created.
- Sector Growth: The mobile exports jumped around 775%, from ₹22,870 crore in 2020-21 to ₹2,00,000 crore in 2024-25.
Challenges
Despite its success, the scheme faces some challenges: –
- Delayed Payments – Not all allocated funds have been released on time.
- Complex Processes – Application and compliance can be difficult for companies to manage.
- Sectoral Underperformance – Some sectors, like speciality steel and solar panels, are behind targets.
PLI Scheme and Startups
The PLI Scheme is not just for large companies. It helps the startups and small businesses to scale up the manufacturing with lower financial risks. By linking the incentives to production and sales, startups can easily invest in modern and high-tech machinery, hire skilled employees and compete in global markets.
For example, various startups in the sector of electronics, medical devices, drones and renewable energy are using this scheme to innovate and grow faster. Collaborations with incubators and industry associations also guide startups on technology adoption, compliance, and market access. This makes the PLI Scheme a key driver for the startup-led manufacturing growth in India.
PLI Scheme and Global Competitiveness
It is one of the major schemes that focus on long-term goals to make India a global manufacturing hub. The PLI Scheme aims to minimise India’s reliance on imports from these countries by boosting domestic production of high-value goods.
For instance:
- Mobile Manufacturing: India is now one of the major exporters of mobile phones and electronic components.
- Pharmaceuticals: Indian companies are producing APIs and the medical devices that were previously imported, making India a trusted global supplier.
The scheme also motivates the technology transfer and innovation. Incentives are given to the various companies for adopting the advanced technologies, helping India develop capabilities in the renewable energy, ACC batteries and drone technology. This enhances the domestic ecosystem and attracts foreign investment, as global companies want to leverage India’s skilled workforce and cost advantages.
Integration with Other Policies
The PLI Scheme works alongside other initiatives, such as Make in India and the Export Promotion Capital Goods (EPCG) scheme. Together, these policies help create a robust value chain in which Indian manufacturers are competitive in quality, cost, and scale. This enhances the domestic ecosystem and attracts foreign investment, as the global companies want to utilise India’s skilled workforce and cost advantages.
Real-Life Success Stories
Several companies and startups have benefited from the PLI Scheme:
- Mobile Manufacturing: Companies such as Foxconn, Lava, and Dixon Technologies have expanded their production in India. Foxconn set up new assembly lines to boost increased exports, making India the second-largest mobile manufacturing hub at the global level. Lava and Dixon invested in advanced machinery and created thousands of jobs in smaller cities.
- Pharmaceuticals: Companies like Dr Reddy’s Laboratories and Sun Pharma are producing the APIs domestically, to reduce the dependency on imports and to enhance India’s position as the “pharmacy of the world.”
- Startups and SMEs: The startups in the sector of drones, medical devices and renewable energy, such as Asteria Aerospace and IdeaForge, are scaling production, investing in technology and also entering global markets, thanks to the PLI incentives.
These stories show how the PLI Scheme is not only supporting the large companies but also helping various startups and SMEs innovate as well, grow and contribute to India’s economy
Conclusion
The PLI Scheme is one of the major steps towards making India a global manufacturing powerhouse. By encouraging domestic production, supporting startups, promoting technology and innovation and improving global competitiveness, the scheme is creating a strong and sustainable industrial ecosystem.
While challenges remain, continued efforts and policy improvements will ensure that the PLI Scheme boosts employment, exports, and technological advancement, shaping India’s manufacturing landscape for years to come.
