{"id":29253,"date":"2026-09-04T17:13:27","date_gmt":"2026-09-04T11:43:27","guid":{"rendered":"https:\/\/vajiramandravi.com\/upsc-exam\/?p=29253"},"modified":"2026-09-04T17:13:27","modified_gmt":"2026-09-04T11:43:27","slug":"pli-scheme","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/upsc-exam\/pli-scheme\/","title":{"rendered":"PLI Scheme, Background, Sectors, Achievements, Challenges"},"content":{"rendered":"<p><span style=\"font-weight: 400\">The Production Linked Incentive, or PLI Scheme, is a cornerstone of India\u2019s strategy to expand domestic manufacturing, attract investment and move towards increasing manufacturing\u2019s contribution to GDP to <\/span><b>25%<\/b><span style=\"font-weight: 400\">. With an incentive outlay of \u20b91.91 lakh crore<\/span><b> across 14 key sectors<\/b><span style=\"font-weight: 400\">, the scheme seeks to enhance production and promote economies of scale, create employment and integrate Indian firms into global value chains.<\/span><\/p>\r\n<p><span style=\"font-weight: 400\">Beyond financial support, the PLI Scheme encourages industries to strengthen domestic capabilities, adopt advanced technologies and undertake greater innovation. As of the latest figures cited, 836 applications across the 14 sectors have been approved, reflecting significant industry participation. The initiative is therefore helping India transition from conventional factory-led production towards technology-driven, innovation-oriented and globally competitive manufacturing.<\/span><\/p>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Introduction<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">PLI's full form is the Production Linked Incentive Scheme. It supports national objectives such as Atmanirbhar Bharat and India's $5 trillion economy. It complements the Make in India and Atmanirbhar Bharat initiatives by promoting large-scale domestic manufacturing and deeper integration into global value chains.<\/span><\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">By promoting domestic manufacturing of gadgets and cell phones, it propels Digital India and lowers the cost of technology.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Additionally, it is in line with the <\/span><span style=\"font-weight: 400\">India Semiconductor Mission<\/span><span style=\"font-weight: 400\">, which is supported by a package of 76,000 crore and seeks to boost India's integration into global electronics value chains by offering financial support for investments in semiconductor fabrication, display production, and chip design.<\/span><\/li>\r\n<\/ul>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Objectives<\/span><\/h2>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><b>Expand Domestic Manufacturing Capacity:<\/b><span style=\"font-weight: 400\"> The PLI Scheme encourages companies to increase production within India and build stronger domestic manufacturing capabilities.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Attract <a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/investment\/\" target=\"_blank\">Investment<\/a>:<\/b><span style=\"font-weight: 400\"> The scheme encourages domestic and foreign companies to invest in selected manufacturing sectors and expand production facilities.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Enhance Exports:<\/b><span style=\"font-weight: 400\"> The scheme aims to improve the competitiveness of Indian products and increase their presence in international markets.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Promote Globally Competitive Manufacturing:<\/b><span style=\"font-weight: 400\"> The scheme supports technology adoption, higher productivity and the development of internationally competitive manufacturing firms.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Integrate with Global Supply Chains:<\/b><span style=\"font-weight: 400\"> The scheme helps Indian manufacturers participate more actively in global value chains and international production networks.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Generate Employment:<\/b><span style=\"font-weight: 400\"> The expansion of manufacturing under PLI is expected to create direct and indirect employment opportunities.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Reduce Import Dependence:<\/b><span style=\"font-weight: 400\"> The scheme promotes domestic production of important goods and components to reduce reliance on imports.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Encourage Technological Advancement:<\/b><span style=\"font-weight: 400\"> The scheme incentivises companies to adopt modern technologies and upgrade their manufacturing capabilities.<\/span><\/li>\r\n<\/ul>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Background<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">PLI was launched in 2020 to boost domestic manufacturing through targeted, performance-based incentives across strategic sectors, starting with Mobile Manufacturing and Specified Electronic Components, Critical Key Starting materials\/Drug Intermediaries and Active Pharmaceutical Ingredients and Manufacturing of Medical Devices.<\/span><\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">After its initial success, the scheme was gradually expanded to cover 14 key sectors of the economy, including pharmaceuticals, white goods, vehicles and auto parts, textile products and speciality steel are a few examples.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Over time, the programme garnered significant attention from both local and international stakeholders, resulting in the approval of numerous projects in industries including textiles, electronics, bulk medicines, and medical devices. For instance, the Union Cabinet approved the \u20b915,000 crore PLI initiative for the pharmaceutical industry in February 2021.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">In a similar vein, a \u20b925,938 crore PLI programme for the automotive and auto component industries and a \u20b9120 crore three-year PLI scheme for drones and drone components were approved in September 2021.<\/span><\/li>\r\n<\/ul>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Functions<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">PLI is a government initiative that offers financial rewards to businesses that produce goods in India. These initiatives aim to lower imports and increase indigenous manufacturing. There are several different types of production-related incentive programmes, such as:<\/span><\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><b>Tax incentives: <\/b><span style=\"font-weight: 400\">Businesses that produce goods in India may receive tax breaks from the government. This could lower production costs and increase the competitiveness of Indian goods in the international market.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Cash <a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/subsidy\/\" target=\"_blank\">subsidy<\/a>:<\/b><span style=\"font-weight: 400\"> Businesses that make goods in India may receive cash subsidies from the government. As a result, Indian goods may become more reasonably priced for customers.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Loans:<\/b><span style=\"font-weight: 400\"> Businesses that produce goods in India may be eligible for government loans.<\/span><\/li>\r\n<\/ul>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Working<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">The PLI Scheme operates through a performance-based incentive mechanism, rewarding eligible manufacturers for meeting specified investment, production and sales conditions.<\/span><\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><b>Base Year<\/b><span style=\"font-weight: 400\">: A specified financial year serves as the reference point against which a company\u2019s subsequent growth in eligible production or sales is assessed.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Incremental Sales or Production<\/b><span style=\"font-weight: 400\">: The incentive is determined by the eligible increase in sales or production achieved by a company compared with the prescribed base-year level.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Applicable Incentive Rate<\/b><span style=\"font-weight: 400\">: A sector-specific incentive percentage is applied to the eligible incremental performance, with rates and calculation methods varying across different PLI schemes.<\/span>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Incentive rates range from 4% to 6% of incremental sales over the base year and also vary based on product category (up to 20% for drones).<\/span><\/li>\r\n<\/ul>\r\n<\/li>\r\n\t<li style=\"font-weight: 400\"><b>Eligibility Conditions<\/b><span style=\"font-weight: 400\">: Companies must satisfy prescribed requirements such as minimum investment, turnover, production, net worth or other sector-specific criteria to qualify.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Scheme Period<\/b><span style=\"font-weight: 400\">: Eligible companies receive incentives for a predefined period, generally linked to the investment and production timelines specified under the respective sectoral scheme.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Application and Selection<\/b><span style=\"font-weight: 400\">: Interested companies submit applications through the designated mechanism, after which the concerned ministry or implementing agency evaluates them against the notified eligibility conditions.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Verification and Disbursement<\/b><span style=\"font-weight: 400\">: The implementing authority verifies the company\u2019s investment, production, sales and compliance records before releasing the incentive for the relevant period.<\/span><\/li>\r\n<\/ul>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Features<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">The PLI Scheme incorporates performance-based incentives, sector-specific requirements and time-bound support to strengthen manufacturing, improve competitiveness and encourage greater domestic value creation.<\/span><\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><b>Production-Linked Incentives:<\/b><span style=\"font-weight: 400\"> Incentives are linked to incremental production and\/or sales of eligible products.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Sector-Specific Design<\/b><span style=\"font-weight: 400\">: Each of the 14 sectors has its own eligibility criteria, investment thresholds, incentive structure and performance conditions.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Time-Bound Support<\/b><span style=\"font-weight: 400\">: Incentives are generally provided over a defined period after achieving prescribed conditions.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Scale and Competitiveness:<\/b><span style=\"font-weight: 400\"> Encourages economies of scale, technology adoption and globally competitive manufacturing.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Domestic Value Addition<\/b><span style=\"font-weight: 400\">: Promotes localisation of components, raw materials and supply chains.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Export Orientation<\/b><span style=\"font-weight: 400\">: Supports integration into global value chains and expansion of manufacturing exports.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Employment Generation<\/b><span style=\"font-weight: 400\">: Encourages investment and expansion of production capacity, supporting direct and indirect employment.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Fiscal Discipline<\/b><span style=\"font-weight: 400\">: Government expenditure is linked to actual performance and eligible production\/sales, rather than being an unconditional upfront subsidy.<\/span><\/li>\r\n<\/ul>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Sectors<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">The PLI scheme, with an outlay of Rs. 1.91 lakh crore (more than US$26 billion), includes 14 important sectors that have been launched to improve India's manufacturing capacity and exports. These industries support the government's larger Atmanirbhar Bharat strategy by bolstering domestic production and increasing exports.<\/span><\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Mobile Manufacturing and Specified Electronic Components\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Critical Key Starting Materials\/Drug Intermediaries &amp; Active Pharmaceutical Ingredients, Manufacturing of Medical Devices\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Automobiles and Auto Components,<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Pharmaceutical Drugs,<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Speciality<\/span><span style=\"font-weight: 400\"> Steel,<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Telecom &amp; Networking Products,<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Electronic\/Technology Products,<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">White Goods (ACs and LEDs),<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Food Products,<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Textile Products: MMF segment and technical textiles.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">High-efficiency solar PV modules,<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Advanced Chemistry Cell (ACC) Battery,<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Drones and Drone Components.<\/span><\/li>\r\n<\/ul>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Budget Allocation<\/span><\/h2>\r\n<p><img decoding=\"async\" class=\"alignnone  wp-image-29263\" src=\"https:\/\/vajiramias.sgp1.cdn.digitaloceanspaces.com\/wp\/upsc-exam\/2026\/09\/04162303\/PLI-Scheme-Budget.png\" alt=\"PLI Scheme\" width=\"880\" height=\"855\" srcset=\"https:\/\/vajiramias.sgp1.cdn.digitaloceanspaces.com\/wp\/upsc-exam\/2026\/09\/04162303\/PLI-Scheme-Budget.png 1272w, https:\/\/vajiramias.sgp1.cdn.digitaloceanspaces.com\/wp\/upsc-exam\/2026\/09\/04162303\/PLI-Scheme-Budget-768x747.png 768w\" sizes=\"(max-width: 880px) 100vw, 880px\" \/><\/p>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Achievements<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">Production Linked Incentive (PLI) Schemes have significantly changed India's manufacturing environment. Actual investments worth \u20b92.40 lakh crore have been realised as of 2026. In addition to directly and indirectly creating almost 14.15 lakh jobs, these investments have already resulted in a notable increase in <\/span><span style=\"font-weight: 400\">e<\/span><span style=\"font-weight: 400\">xports of over \u20b915.2 lakh crore.<\/span><\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">In addition, the PLI <\/span><span style=\"font-weight: 400\">programme<\/span><span style=\"font-weight: 400\"> has become a significant employer, creating over 14.15 lakh direct and indirect work opportunities while also promoting further ecosystem development in Tier-2 and Tier-3 cities.\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Crucially, the <\/span><span style=\"font-weight: 400\">programme<\/span><span style=\"font-weight: 400\"> has sparked a new wave of <strong><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/foreign-direct-investment-fdi\/\" target=\"_blank\">foreign direct investment<\/a><\/strong> (FDI) into the nation, supporting India as a top location for high-value manufacturing in a changing global environment. <\/span><b>Some<\/b><b> of the PLI Scheme's top-performing sectors are listed <\/b><b>below:<\/b><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-weight: 400\">Mobile and Electronic Manufacturing<\/span><\/h3>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Mobile phone production has grown by about <\/span><b>2.4 times<\/b><span style=\"font-weight: 400\"> since the scheme began, while imports have fallen by nearly <\/span><b>77%<\/b><span style=\"font-weight: 400\"> and domestic manufacturing now accounts for around <\/span><b>99.2%<\/b><span style=\"font-weight: 400\"> of phones used in India\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Strong policy support from <\/span><span style=\"font-weight: 400\">programmes<\/span><span style=\"font-weight: 400\"> like the National Policy on Electronics (NPE) 2019 has made the electronics industry a shining example of the PLI strategy's effectiveness.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Production increased by 146% between FY 2020\u20132021 and FY 2024\u20132025, from \u20b92.13 lakh crore to \u20b95.25 lakh crore.\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The PLI Scheme has encouraged big smartphone manufacturers to move their manufacturing to India. India has become a significant producer of mobile phones as a result.<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-weight: 400\">Vehicles and Auto Parts<\/span><\/h3>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">India has drawn investments <\/span><b style=\"font-weight: 400\">totalling \u20b9<\/b><span style=\"font-weight: 400\">44,326<\/span><b style=\"font-weight: 400\"> crore <\/b><span style=\"font-weight: 400\">under the PLI scheme till March 2026 and has created more than <\/span><span style=\"font-weight: 400\">67,820 <\/span><span style=\"font-weight: 400\"><b>jobs.<\/b><\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">In order to increase local production of Advanced <\/span><span style=\"font-weight: 400\">Automobile<\/span><span style=\"font-weight: 400\"> Technology (AAT) goods and draw investments in the automobile manufacturing value chain, the Scheme offers financial incentives for 103 categories of AAT components and 19 categories of AAT cars.<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-weight: 400\">Food Preparation<\/span><\/h3>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Up to October 2024, <\/span><b>171 applications were granted under the PLI scheme<\/b><span style=\"font-weight: 400\">, resulting in about \u20b9<\/span><span style=\"font-weight: 400\">9,207<\/span> <span style=\"font-weight: 400\">crore in investments by March 2026 and <\/span><span style=\"font-weight: 400\">3,29,200<\/span><span style=\"font-weight: 400\"> cumulative employment till March 2026<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The <\/span><span style=\"font-weight: 400\">programme,<\/span><span style=\"font-weight: 400\"> which aims to modernise processing facilities, improve the branding of Indian food products, and increase value-added exports, supports programmes like <\/span><span style=\"font-weight: 400\">PM-Formalisation<\/span><span style=\"font-weight: 400\"> of Micro Food Processing Enterprises (PM-FME) and Pradhan Mantri Kisan SAMPADA Yojana (PMKSY).<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-weight: 400\">Pharmaceutical Drugs<\/span><\/h3>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The pharmaceutical sector has achieved cumulative sales exceeding <\/span><b>\u20b93.64 lakh crore<\/b><span style=\"font-weight: 400\"> under PLI, while enabling domestic production of <\/span><b>1,931 pharmaceutical products<\/b><span style=\"font-weight: 400\">, including <\/span><b>191 bulk drugs<\/b><span style=\"font-weight: 400\"> manufactured domestically for the first time.\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">India's pharmaceutical industry, which was formerly highly reliant on imports for necessary raw materials, is now becoming stronger.\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The nation changed from being a net importer of bulk pharmaceuticals (with a \u20b91,930 crore deficit in FY 2021\u20132022) to a net exporter <\/span><b>(with a \u20b92,280 crore surplus in FY 2024\u20132025)<\/b><span style=\"font-weight: 400\"> thanks to targeted PLI support.\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">PLI support has helped establish nearly <\/span><b>55,000 MT of manufacturing capacity<\/b><span style=\"font-weight: 400\"> for <\/span><b>26 critical APIs<\/b><span style=\"font-weight: 400\">, strengthening domestic production of medicines such as Paracetamol, Levofloxacin and Norfloxacin.<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-weight: 400\">PV Solar Modules<\/span><\/h3>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">PLI Tranche I and II combined seek to develop approximately <\/span><b>48 GW of fully <\/b><span style=\"font-weight: 400\">integrated<\/span><span style=\"font-weight: 400\"> production capacity under the PLI for High-Efficiency Solar PV Modules.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Under the broader objectives of Aatmanirbhar Bharat and the National Solar Mission, this is anticipated to strengthen domestic supply chains, lessen reliance on imports, and increase India's energy security.<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-weight: 400\">Semiconductors<\/span><\/h3>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Complementing the broader PLI framework<\/span><span style=\"font-weight: 400\">, the government has implemented specific incentives under the India Semiconductor Mission with the goal of creating an independent semiconductor ecosystem by 2030.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The Union Cabinet has now approved four more production facilities in Odisha, Punjab, and Andhra Pradesh, adding to India's six approved semiconductor projects that are already in various phases of development.\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">With an investment of \u20b94,600 crore, these projects approved under the India Semiconductor Mission (ISM) are anticipated to directly employ <\/span><b>2,034 skilled workers<\/b><span style=\"font-weight: 400\"> and boost the larger electronics manufacturing ecosystem, resulting in substantial indirect job creation.<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-weight: 400\">Textiles<\/span><\/h3>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">In September 2021, the PLI Scheme for Textiles was authorised with an outlay of Rs. 10,683 crore to encourage the nation's production of MMF Apparel, MMF Fabrics, and technical textiles to help the textile industry grow and become competitive.\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Technical textile exports increased to<\/span><b> \u20b9294 crore from \u20b9200 crore<\/b><span style=\"font-weight: 400\"> the year before, while man-made fibre (MMF) exports increased to approximately \u20b9525 crore in FY 2024\u201325 (from \u20b9499 crore in FY 2023\u201324).<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-weight: 400\">White Products (LED lights and air conditioners)<\/span><\/h3>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">With an investment of \u20b96,238 crore, the PLI project for white goods was introduced in April 2021 with the goal of converting India from an assembly hub to a high-value manufacturing base.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The scheme has significantly expanded domestic production of air-conditioner components, with compressor manufacturing capacity rising from<\/span><b> 1 million units in 2021 to 10 million units in 2025\u201326.<\/b><\/li>\r\n\t<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">By 2028\u20132029, it hopes to increase domestic value addition from <\/span><b>20\u201325% to 75\u201380%<\/b><span style=\"font-weight: 400\">. Incentives totalling \u20b9<\/span><span style=\"font-weight: 400\">6,409<\/span><span style=\"font-weight: 400\"> crore have been distributed till March 2026, supporting India's drive for energy-efficient, internationally competitive appliances.<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-weight: 400\">PLI Scheme helping MSMEs<\/span><\/h3>\r\n<p>The PLI Scheme has helped the MSME sector in the following ways.<\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><b>Integration with Supply Chains:<\/b><span style=\"font-weight: 400\"> MSMEs can become suppliers of components, parts and services to large PLI-supported manufacturers, creating more stable business opportunities.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Technology Upgradation:<\/b><span style=\"font-weight: 400\"> Participation in organised manufacturing networks encourages MSMEs to improve production processes, quality standards and technological capabilities.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Direct Benefits:<\/b><span style=\"font-weight: 400\"> More than 176 MSMEs have reportedly received direct benefits under PLI initiatives across sectors such as medical devices, bulk drugs, food processing and textiles.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Access to Larger Markets:<\/b><span style=\"font-weight: 400\"> Growing production and export-oriented manufacturing networks can provide MSMEs with opportunities to serve national as well as international markets.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Growth of MSMEs and Startups:<\/b><span style=\"font-weight: 400\"> PLI-supported sectors such as drones have created opportunities for smaller firms and startups, contributing to investment, production and employment growth.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Promotion of Domestic Manufacturing:<\/b><span style=\"font-weight: 400\"> The scheme encourages the establishment of new manufacturing facilities in India, creating business opportunities for MSMEs as component suppliers and ancillary producers.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Opportunities in Telecom Manufacturing:<\/b><span style=\"font-weight: 400\"> Expansion of domestic telecom production under PLI has created greater scope for MSMEs to participate in the supply ecosystem for 4G and 5G equipment.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Greater Investment and Employment:<\/b><span style=\"font-weight: 400\"> Rising manufacturing activity under PLI can generate demand for MSME suppliers, supporting investment, capacity expansion and job creation.<\/span><\/li>\r\n<\/ul>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme and Make in India Difference<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">The PLI Scheme and <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/make-in-india\/\" target=\"_blank\">Make in India<\/a><\/strong><span style=\"font-weight: 400\"> are both initiatives aimed at strengthening India\u2019s manufacturing sector, but Make in India is a broad industrial policy initiative, while the PLI Scheme is a targeted financial incentive programme designed to reward higher production.<\/span><\/p>\r\n<table style=\"width: 97.1933%\">\r\n<tbody>\r\n<tr>\r\n<td class=\"tb-color\" style=\"width: 12.843%\"><b>Basis<\/b><\/td>\r\n<td class=\"tb-color\" style=\"width: 37.5596%\"><b>Make in India<\/b><\/td>\r\n<td class=\"tb-color\" style=\"width: 45.9902%\"><b>PLI Scheme<\/b><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"width: 12.843%\">\r\n<p><span style=\"font-weight: 400\">Nature<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 37.5596%\">\r\n<p><span style=\"font-weight: 400\">A broad policy initiative to promote manufacturing and investment in India.<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 45.9902%\">\r\n<p><span style=\"font-weight: 400\">A performance-linked incentive programme providing financial rewards to eligible manufacturers.<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"width: 12.843%\">\r\n<p><span style=\"font-weight: 400\">Launch<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 37.5596%\">\r\n<p><span style=\"font-weight: 400\">Launched in September 2014.<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 45.9902%\">\r\n<p><span style=\"font-weight: 400\">Introduced from 2020 onwards, beginning with selected sectors.<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"width: 12.843%\">\r\n<p><span style=\"font-weight: 400\">Primary Focus<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 37.5596%\">\r\n<p><span style=\"font-weight: 400\">Creating a favourable environment for manufacturing, investment, innovation and entrepreneurship.<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 45.9902%\">\r\n<p><span style=\"font-weight: 400\">Increasing production, investment and sales in identified manufacturing sectors.<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"width: 12.843%\">\r\n<p><span style=\"font-weight: 400\">Sectoral Coverage<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 37.5596%\">\r\n<p><span style=\"font-weight: 400\">Broadly covers manufacturing and investment across multiple sectors.<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 45.9902%\">\r\n<p><span style=\"font-weight: 400\">Covers 14 identified sectors, including electronics, pharmaceuticals, automobiles, textiles and speciality steel.<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"width: 12.843%\">\r\n<p><span style=\"font-weight: 400\">Incentive Mechanism<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 37.5596%\">\r\n<p><span style=\"font-weight: 400\">Does not primarily operate through direct production-linked cash incentives.<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 45.9902%\">\r\n<p><span style=\"font-weight: 400\">Provides incentives based on eligible incremental production or sales, according to sector-specific rules.<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"width: 12.843%\">\r\n<p><span style=\"font-weight: 400\">Main Objective<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 37.5596%\">\r\n<p><span style=\"font-weight: 400\">Establish India as an attractive global manufacturing and investment destination.<\/span><\/p>\r\n<\/td>\r\n<td style=\"width: 45.9902%\">\r\n<p><span style=\"font-weight: 400\">Expand domestic manufacturing capacity, improve competitiveness and integrate India with global value chains.<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Challenges<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">The Production<\/span><span style=\"font-weight: 400\"> Linked Incentive (PLI) Scheme has become a major endeavour to strengthen India's place in global value chains and increase local <\/span><span style=\"font-weight: 400\">manufacturing,<\/span><span style=\"font-weight: 400\"> but its execution has faced several structural, financial, and administrative obstacles. <\/span><b>The following is a discussion of the main issues with the PLI Scheme:<\/b><\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><b>Complicated Requirements for Eligibility and Compliance:<\/b><span style=\"font-weight: 400\"> Many businesses, especially smaller ones, find it challenging to comply with the scheme's intricate qualifying rules, investment thresholds, output targets, and domestic value addition standards.\u00a0<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Slow Execution:<\/b><span style=\"font-weight: 400\"> The speed of implementation has slowed due to delays in approving beneficiaries and operationalising the scheme, which has prevented some sectors from receiving the intended benefits within the anticipated timeframe.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Inconsistent Sectoral Outcomes<\/b><span style=\"font-weight: 400\">: A few businesses, like mobile phones and IT hardware, have benefited greatly from the PLI Scheme, while a number of other industries have made little headway, leading to unequal industrial development.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Insufficient Attention to R&amp;D and Innovation<\/b><span style=\"font-weight: 400\">: Research, technical innovation, talent development, and the creation of indigenous intellectual property are given relatively less attention under the plan, which primarily incentivises production and sales growth.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Production Fragmentation Risk:<\/b><span style=\"font-weight: 400\"> Many companies have received authorisation in some industries, which could result in fragmented production capacity rather than the economies of scale needed for global competitiveness.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Low Domestic Value Addition and Import Dependence:<\/b><span style=\"font-weight: 400\"> High reliance on imported components, raw materials and intermediate goods can limit the domestic economic value generated despite rising production.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Risk of Assembly-led Manufacturing:<\/b><span style=\"font-weight: 400\"> If companies mainly assemble imported components rather than manufacture critical parts and technologies domestically, India may increase output without developing deeper manufacturing capabilities.<\/span><\/li>\r\n<\/ul>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme Way Forward<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">The <\/span><span style=\"font-weight: 400\">PLI scheme\u2019s<\/span><span style=\"font-weight: 400\"> long-term success will be guaranteed by a comprehensive strategy that includes skill development, infrastructure development, and legislative reforms.<\/span><\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400\"><b>Simplify the requirements for eligibility and compliance:<\/b><span style=\"font-weight: 400\"> To promote greater involvement, especially from MSMEs and developing firms, the government should simplify compliance standards, speed approval processes, and eliminate procedural complexity.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Boost Local Supply Chains<\/b><span style=\"font-weight: 400\">: Under the Atmanirbhar Bharat project, more focus should be put on creating domestic raw material and component manufacturing ecosystems to lessen reliance on imports and strengthen supply chain resilience.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Encourage innovation, research, and development<\/b><span style=\"font-weight: 400\">: To boost India's competitiveness internationally, PLI incentives should be combined with more funding for R&amp;D, cutting-edge technology, design skills, and the production of intellectual property.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Strengthen Integration with MSMEs:<\/b><span style=\"font-weight: 400\"> Through vendor development <\/span><span style=\"font-weight: 400\">programmes,<\/span><span style=\"font-weight: 400\"> technology transfer, and easier access to financing, large manufacturers funded by the PLI Scheme should be encouraged to incorporate MSMEs into their value chains.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Enhance Logistics and Infrastructure<\/b><span style=\"font-weight: 400\">: Enhancing ports, digital infrastructure, multimodal logistics, industrial corridors, and power supplies will lower manufacturing costs and make doing business in India easier.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Promote the Development of Skills:<\/b><span style=\"font-weight: 400\"> The availability of a trained workforce needed for sophisticated manufacturing sectors would be ensured by growing industry-oriented skill development <\/span><span style=\"font-weight: 400\">programmes<\/span><span style=\"font-weight: 400\"> under <\/span><span style=\"font-weight: 400\">programmes<\/span><span style=\"font-weight: 400\"> like Skill India.<\/span><\/li>\r\n\t<li style=\"font-weight: 400\"><b>Assure Monitoring and Disbursement on Time<\/b><span style=\"font-weight: 400\">: Investor trust will <\/span><span style=\"font-weight: 400\">increase,<\/span><span style=\"font-weight: 400\"> and the plan will be implemented more effectively with a transparent monitoring system that expedites approval and <\/span><span style=\"font-weight: 400\">rewards<\/span><span style=\"font-weight: 400\"> payment.<\/span><\/li>\r\n<\/ul>\r\n<h2><span style=\"font-weight: 400\">PLI Scheme UPSC PYQs<\/span><\/h2>\r\n<p><span style=\"font-weight: 400\">Q1. Discuss the rationale of the Production Linked Incentive (PLI) scheme. What are its achievements? In what way can the functioning and outcomes of the scheme be improved? <\/span><b>(UPSC Mains 2025)<\/b><\/p>\r\n<p><span style=\"font-weight: 400\">Q2. Consider the following statements : <\/span><b>(UPSC Prelims 2023)<\/b><\/p>\r\n<p><span style=\"font-weight: 400\">Statement-I: India accounts for 3.2% of global export of goods.<\/span><\/p>\r\n<p><span style=\"font-weight: 400\">Statement-II: Many local companies and some foreign companies operating in India have taken advantage of India\u2019s \u2018Production-linked Incentive\u2019 scheme.\u00a0<\/span><\/p>\r\n<p><span style=\"font-weight: 400\">Which one of the following is correct in respect of the above statements?<\/span><\/p>\r\n<p><span style=\"font-weight: 400\">(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I<\/span><span style=\"font-weight: 400\"><br \/>\r\n<\/span><span style=\"font-weight: 400\">(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I<\/span><span style=\"font-weight: 400\"><br \/>\r\n<\/span><span style=\"font-weight: 400\">(c) Statement-I is correct but Statement-II is incorrect<\/span><span style=\"font-weight: 400\"><br \/>\r\n<\/span><span style=\"font-weight: 400\">(d) Statement-I is incorrect but Statement-II is correct.<\/span><\/p>\r\n<p><strong>Ans: (d)<\/strong><\/p>","protected":false},"excerpt":{"rendered":"<p>Launched in 2020, the PLI Scheme aims to balance growth and sustainability, enhance the manufacturing base, and lessen dependency on imports. Learn about its background, sectors and achievements.<\/p>\n","protected":false},"author":35,"featured_media":29281,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[38,30],"tags":[1982,40,1033],"class_list":["post-29253","post","type-post","status-publish","format-standard","has-post-thumbnail","category-upsc-notes","category-upsc-economy-notes","tag-pli-scheme","tag-quest","tag-upsc-economy-notes"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/posts\/29253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/users\/35"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/comments?post=29253"}],"version-history":[{"count":3,"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/posts\/29253\/revisions"}],"predecessor-version":[{"id":29284,"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/posts\/29253\/revisions\/29284"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/media\/29281"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/media?parent=29253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/categories?post=29253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/upsc-exam\/wp-json\/wp\/v2\/tags?post=29253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}