Follow us on:
Economy | June 10, 2026
The Production Linked Incentive scheme is India’s most ambitious manufacturing policy since liberalisation. Announced with an outlay of Rs 1.97 lakh crore across 14 sectors, it promised to transform India from an import-dependent economy into a global manufacturing hub. Five years in, the scheme has produced genuine results: Rs 20.41 lakh crore in cumulative sales, Rs 8.3 lakh crore in exports, 14.39 lakh jobs, and Rs 2.16 lakh crore in actual investment. But only Rs 28,748 crore of the Rs 1.97 lakh crore outlay had been disbursed as incentives by December 31, 2025, which is approximately 14.6 percent of the total. Two sectors, electronics and pharmaceuticals, account for the majority of what has been paid out. Four sectors have received negligible disbursements. Two sectors had received nothing at all as of late 2024. This article explains precisely how the PLI mechanism works, who has received incentives, how much, and what the disbursement pattern reveals about which sectors have delivered on the scheme’s original promise and which have not.
Table of Contents
- Part I: How the PLI Scheme Works: The Mechanics of Performance-Linked Incentives Incremental sales, base year benchmarks, the claim cycle, and why disbursements lag outlay
- Part II: The 14 Sectors: Outlay, Rationale, and Who Was Eligible Complete sector-wise breakdown of approved outlays, implementing ministries, and incentive rates
- Part III: The Leaders: Electronics and Pharmaceuticals How two sectors account for over 70% of all PLI disbursements and what they achieved
- Part IV: The Midfield: Telecom, Auto, Food Processing, White Goods, and Solar Genuine progress in telecom and solar, mixed results in auto, and slower-than-expected food processing
- Part V: The Laggards: Textiles, Specialty Steel, ACC Battery, and Others Sectors where disbursements have been minimal and the structural reasons behind underperformance
- Part VI: A Critical Assessment: The Gap Between Outlay and Disbursement Why 14.6% disbursement in five years is not necessarily a failure, and what it actually reveals
- Frequently Asked Questions
Rs 1.97 lkh cr
Total approved outlay across 14 sectors over the life of the scheme. The revised effective outlay as of February 2026 stands at Rs 1.91 lakh crore after scheme-level adjustments.
Rs 28,748 cr
Total incentives actually disbursed as of December 31, 2025, representing approximately 14.6% of the total outlay. Disbursements began only in FY23.
Rs 20.41 lkh cr
Cumulative production and sales by PLI beneficiaries as of December 31, 2025. Exports account for Rs 8.3 lakh crore of this total.
14.39 lakh
Direct and indirect jobs generated under the PLI scheme as of December 31, 2025, across 836 approved applications in 14 sectors.
Part IHow the PLI Scheme Works: The Mechanics of Performance-Linked Incentives
A Fundamental Shift from Input-Based to Output-Based Incentives
India’s industrial policy before the PLI era was predominantly input-based. Tax exemptions, capital subsidies, and duty concessions were granted at the time a company made an investment, regardless of whether that investment ever produced output, generated exports, or created jobs. The PLI scheme represented a deliberate break from this approach. Under PLI, no incentive is paid at the point of investment. Every rupee of incentive is paid only after a company has demonstrated verifiable incremental production above a baseline defined in the scheme’s guidelines.
The mechanism is straightforward in principle. The government designates a base year, typically FY 2019-20 or FY 2020-21 depending on the sector. Companies that have been approved as PLI beneficiaries must first meet a minimum investment threshold, which varies by sector and company category. After meeting the investment threshold and commencing eligible production, the company submits audited sales data to the implementing ministry at the end of each claim year. The ministry verifies the incremental sales figure, defined as eligible sales in the claim year minus eligible sales in the base year. A fixed incentive rate, ranging from 4 percent to 18 percent of the incremental sales depending on the sector and the year of the scheme, is then applied to the incremental figure to determine the incentive payable. Once verified, the incentive is transferred directly to the company’s bank account.
Why disbursements structurally lag outlay: The gap between the total approved outlay of Rs 1.97 lakh crore and the amount disbursed so far is not a sign of scheme failure on its own. The outlay represents the maximum incentive payable over the entire multi-year life of all 14 schemes, spanning periods of five to ten years from their respective launch dates. Disbursements only begin after a beneficiary has made its minimum investment, commenced eligible production, and filed its first claim, which typically takes one to two years from the date of approval. For sectors launched in 2021, the first claims could only be filed in 2023. For sectors like Advanced Chemistry Cell batteries and Semiconductors, where manufacturing gestation periods are three to five years, meaningful disbursements may not begin until 2026 or 2027. The relevant question is not whether 100 percent has been disbursed, but whether sectors that have been running long enough to produce claims are paying out in line with their targets.
The Claim Cycle and Verification Process
The annual claim cycle is the operational heart of the PLI scheme. Each implementing ministry issues sector-specific guidelines that prescribe the eligible products, the base year sales figure for each company, the minimum investment threshold, the annual incentive rate, and the claim submission deadline. Companies submit their claims along with audited financial statements, certificates from chartered accountants, and compliance declarations. The ministry’s designated Project Management Agency or internal verification team validates the claims, which may involve physical inspections, cross-checks with GST return data, and reconciliation with customs records for export-linked claims.
The verification and disbursement cycle typically means that claims filed in November or December of one financial year are paid between January and March of the same financial year or in the first quarter of the following year. This explains the back-loaded pattern of PLI disbursements observed in government data, where the bulk of annual payouts occurs in the January to March window. For sectors like food processing, where claims are filed in late November and December, DPIIT has explicitly noted that assessing disbursements between April and October does not give an accurate picture of the year’s payouts.
Part IIThe 14 Sectors: Outlay, Rationale, and Who Was Eligible
Complete Sector-wise Outlay Breakdown
The PLI scheme was not launched as a single initiative. It began in April 2020 with three sectors, extended progressively to 14 sectors by November 2020, with most schemes receiving Union Cabinet approval in February 2021. Each sector has a dedicated implementing ministry, a defined total incentive outlay, a specific incentive rate structure, and its own eligibility criteria. The table below presents the complete approved outlay for all 14 sectors based on Union Cabinet approvals.
| Sector | Approved Outlay (Rs crore) | Implementing Ministry | Cabinet Approval | Incentive Rate |
|---|---|---|---|---|
| Large-Scale Electronics Manufacturing (mobile phones and specified components) | 40,951 | MeitY | April 2020 | 4%–6% of incremental sales |
| Pharmaceuticals (finished dosage formulations) | 15,000 | Dept. of Pharmaceuticals | February 2021 | 3%–10% of incremental sales (3 categories) |
| Automobiles and Auto Components | 25,938 | Ministry of Heavy Industries | September 2021 | 13%–18% on AAT vehicles; 8%–13% on AAT components |
| Advanced Chemistry Cell (ACC) Battery Storage | 18,100 | Ministry of Heavy Industries | May 2021 | Rs 2,000 per KWh of domestic sales (declining) |
| High Efficiency Solar PV Modules | 24,000 | Ministry of New and Renewable Energy | April 2021 | 4%–5% of net sales (Tranche I); variable (Tranche II) |
| Telecom and Networking Products | 12,195 | Department of Telecom | February 2021 | 6%–7% in Year 1 to 2, declining to 4% in Year 4 to 6 |
| Specialty Steel | 6,322 | Ministry of Steel | July 2021 | 4%–12% of incremental sales |
| Textiles (MMF Apparel, MMF Fabrics, Technical Textiles) | 10,683 | Ministry of Textiles | September 2021 | 3%–15% depending on product category and year |
| Food Processing | 10,900 | Ministry of Food Processing Industries | March 2021 | 10% (Year 1 to 2), 9% (Year 3), 8% (Year 4 to 6) |
| White Goods (Air Conditioners and LED Lights) | 6,238 | DPIIT | April 2021 | 6% (Year 1 to 5), 5% (Year 6), 4% (Year 7) |
| IT Hardware (laptops, tablets, servers, PCs) | 17,000 (revised May 2023; original 2021 outlay was Rs 7,325 crore) | MeitY | February 2021 (PLI 1.0); May 2023 (PLI 2.0) | Up to 5% on incremental sales (PLI 2.0); 1%–4% under original scheme |
| Bulk Drugs (Key Starting Materials and Active Pharmaceutical Ingredients) | 6,940 | Dept. of Pharmaceuticals | March 2020 | 10%–20% of incremental sales by cluster type |
| Medical Devices | 3,420 | Dept. of Pharmaceuticals | March 2020 | 5% of incremental sales |
| Drones and Drone Components | 120 | Ministry of Civil Aviation | September 2021 | 20% of sales value (Year 1), declining to 8% (Year 3) |
| Total (original 2020-21 approvals) | ~1,97,807 (original; effective outlay higher after IT Hardware PLI 2.0 revision to Rs 17,000 crore in May 2023) |
Note on revised effective outlay: The Ministry of Commerce and Industry’s February 2026 PIB press release refers to the PLI scheme’s incentive outlay as Rs 1.91 lakh crore rather than Rs 1.97 lakh crore. This revision reflects adjustments including scheme-level restructuring, absorption of unutilised outlay in certain sectors, and allocation changes. The original announced outlay across all 14 Cabinet-approved schemes totalled approximately Rs 1,97,807 crore. The Rs 1.91 lakh crore is the current effective outlay figure used in official communications.
How Beneficiaries Were Selected
PLI beneficiary selection varied by sector but followed a broadly consistent framework. Companies applied to the implementing ministry with documentation demonstrating their eligibility: existing production capacity, proposed investment commitment, base year sales, domestic value addition levels, and net worth. Applications were evaluated by inter-ministerial committees or ministry-level empowered groups. Selection criteria included the applicant’s willingness to make the required investment, the approved product categories to be manufactured, domestic value addition, and eligible net worth thresholds. The scheme was open to both domestic and foreign-owned companies registered in India under the Companies Act, 2013, but not to partnership firms or proprietorships.
Approved beneficiaries signed Memoranda of Understanding with the implementing ministry specifying their investment commitment, production targets, and the timeline for their scheme participation. Failure to meet investment thresholds or production targets in any given year results in a proportional reduction or forfeiture of that year’s incentive, though not necessarily in disqualification from future years. As of December 31, 2025, 836 applications had been approved across all 14 sectors, up from 755 in March 2024 and 764 in March 2025.
Part IIIThe Leaders: Electronics and Pharmaceuticals
Electronics: The Flagship Success
The PLI scheme for Large-Scale Electronics Manufacturing, covering mobile phones and specified electronic components, is unambiguously the scheme’s most visible success. The sector had the first-mover advantage: its PLI was launched in April 2020, giving it a two-year head start over most other sectors. Its base year was FY 2019-20, and the first incentive claims were filed and paid in FY 2022-23.
The results are measurable and substantial. Electronics production in India surged by 146 percent from Rs 2.13 lakh crore in FY 2020-21 to Rs 5.25 lakh crore in FY 2024-25, driven in large part by PLI-anchored expansion of mobile phone manufacturing. Mobile phone imports declined by nearly 77 percent since FY 2020-21, while over 99 percent of domestic demand is now met through local production, a reversal of the import dependence that characterised the sector before PLI. India has become the world’s second-largest mobile phone manufacturer, a status that was entirely unthinkable in 2019. Major global original equipment manufacturers shifted significant production capacity to India under the PLI incentive framework.
FY25 disbursement from electronics: Rs 5,732 crore, the single largest sector payout in FY25, accounting for approximately 56.7 percent of the total Rs 10,114 crore disbursed across all PLI sectors in FY25. Cumulative disbursements from the electronics PLI have been the largest of any sector. The IT hardware sub-scheme, covering laptops, tablets, servers, and all-in-one PCs, has progressed more slowly due to the greater complexity of component localisation compared to mobile assembly, but domestic manufacturing capacity has expanded and progressive localisation of components is underway.
Pharmaceuticals: From Net Importer to Net Exporter
The pharmaceutical sector under PLI is administered through three separate schemes: the PLI for Pharmaceuticals (finished dosage formulations with a Rs 15,000 crore outlay), the PLI for Bulk Drugs or Key Starting Materials and Active Pharmaceutical Ingredients (Rs 6,940 crore), and the PLI for Medical Devices (Rs 3,420 crore). Together they represent one of the most strategically significant components of the programme, targeting India’s long-standing dependence on imported bulk drug intermediates, primarily from China.
The results on bulk drugs have been transformative. India was a net importer of bulk drugs, recording a deficit of Rs 1,930 crore in FY 2021-22. By FY 2024-25, India had become a net exporter of bulk drugs, recording a surplus of Rs 2,280 crore. The PLI scheme enabled first-time domestic manufacturing of 191 bulk drugs that India had previously imported entirely. Domestic value addition in the pharmaceuticals sector has reached 83.70 percent as of March 2025. In the first three years of the pharmaceuticals PLI, sales by PLI beneficiaries crossed Rs 2.66 lakh crore, including exports of Rs 1.70 lakh crore. India is now the third-largest pharmaceutical producer globally by volume, with exports accounting for approximately 50 percent of total pharmaceutical production.
FY25 disbursement from pharmaceuticals: Rs 2,328 crore, the second largest sector payout in FY25. When combined with bulk drugs and medical devices disbursements, the three pharma-related schemes collectively accounted for the largest share of cumulative PLI payouts after electronics. The PLI for Medical Devices has enabled domestic production of 44 high-end medical products that were previously fully imported, including Linear Accelerators, MRI machines, CT scanners, and mammography equipment, with 19 greenfield projects commissioned as of March 2025.
Part IVThe Midfield: Telecom, Auto, Food Processing, White Goods, and Solar
Telecom: Six-Fold Sales Growth, Rs 21,033 Crore in Exports
The PLI scheme for Telecom and Networking Products, with an outlay of Rs 12,195 crore, has achieved results that are arguably the most strategically significant of any sector relative to India’s geopolitical and supply chain objectives. Sales of telecom and networking products have increased more than six-fold over the base year of FY 2019-20. India has achieved 60 percent import substitution in telecom products, and global technology companies have established manufacturing units in India, positioning the country as a major exporter of 4G and 5G equipment. Exports under the telecom PLI reached Rs 21,033 crore, a figure that did not exist before the scheme. The most notable milestone has been the deployment of India’s indigenous end-to-end 4G technology stack by BSNL, making India one of a small number of countries capable of developing and deploying its own complete mobile technology stack.
FY25 disbursement from telecom: Rs 840 crore, the third largest sector payout in FY25. Cumulative telecom disbursements have been growing steadily as beneficiaries scale up. The scheme’s six-fold sales growth over the base year, combined with the BSNL 4G indigenisation milestone, makes telecom one of the clearest examples of PLI generating outcomes beyond mere production scale, specifically the development of domestic technology capability in a strategic sector.
Automobiles and Auto Components: Committed Rs 67,690 Crore, Focus on Advanced Technology
The PLI scheme for Automobiles and Auto Components, with an outlay of Rs 25,938 crore, is among the largest single-sector schemes but has a more targeted mandate than its outlay size might suggest. The scheme does not cover conventional internal combustion engine vehicles. It applies specifically to Advanced Automotive Technology vehicles across 19 categories and 103 categories of AAT components, all of which are oriented toward electric vehicles, hybrid vehicles, and vehicles with advanced safety and power electronics systems.
Committed investments under the automobile PLI have reached Rs 67,690 crore. Actual investments made as of March 2024 stood at Rs 14,043 crore, generating over 28,884 direct jobs. Sales by PLI beneficiaries in FY 2025-26 reached Rs 32,879 crore, indicating early commercial momentum. FY25 disbursement from the automobile sector was Rs 322 crore, relatively modest given the scheme’s Rs 25,938 crore outlay, reflecting the fact that AAT production is still ramping up from a low base and that many beneficiary projects remain in the investment and ramp-up phase.
Food Processing: 171 Beneficiaries, Rs 1,084 Crore Disbursed
The PLI scheme for Food Processing, with an outlay of Rs 10,900 crore, covers four product categories: ready-to-eat and ready-to-cook foods, processed fruits and vegetables, marine products, and mozzarella cheese. It was subsequently expanded to include millets through a separately carved-out PLI Scheme for Millet-Based Products with an outlay of Rs 800 crore in FY 2022-23. As of February 2026, a total of 165 applications had been approved by the Ministry of Food Processing Industries covering 274 project locations. Beneficiaries reported investments of Rs 9,207 crore, with processing and preservation capacity of 34 lakh metric tonnes per annum created. Cumulative disbursements reached Rs 2,162.55 crore as of February 2026. FY25 disbursements were Rs 448 crore. The scheme has generated approximately 3.39 lakh direct and indirect jobs by February 2026, exceeding its original target of 2.5 lakh jobs by 2026-27.
The food processing PLI has a structural claim timing characteristic that has made interim progress appear slower than it is. Claim filing deadlines are November 30 for millets and December 31 for other categories. Most disbursements therefore occur between January and March of the following financial year. DPIIT has explicitly noted in official communications that assessing disbursement performance between April and October gives a misleading picture of progress in this sector. FY 2022-23 disbursements were Rs 474 crore; the FY 2023-24 target of Rs 700 crore was on track for achievement when reported.
White Goods: Rs 281.4 Crore Disbursed, Deep Component Localisation Underway
The PLI scheme for White Goods, covering air conditioners and LED lights, was launched in April 2021 with an outlay of Rs 6,238 crore. Its objective is more specific than simply expanding production: it aims to shift India from being an assembly hub, where finished products are assembled from mostly imported components, to a genuine manufacturing base where critical components are produced domestically. The target is to increase domestic value addition from the 20 to 25 percent range at the scheme’s launch to 75 to 80 percent by 2028-29.
As of the August 2025 PIB report, total disbursements under the white goods PLI stood at Rs 281.4 crore, the smallest among sectors with active disbursements given the scheme’s size. Eighty-four companies are set to bring investments of Rs 10,478 crore across air conditioner and LED segments. Component-level production has begun for compressors, copper tubes, heat exchangers, motors, and control assemblies for air conditioners, and for LED chip packaging, LED drivers, and metallised films for capacitors in the LED segment.
High Efficiency Solar PV Modules: Rs 52,942 Crore Committed, 48 GW Targeted
The PLI scheme for High Efficiency Solar PV Modules operates across two tranches. Tranche I targets integrated solar PV manufacturing across the value chain from polysilicon to module. Tranche II expanded the programme with additional capacity targets. Together, Tranche I and II aim to create nearly 48 GW of fully integrated solar PV manufacturing capacity in India, a strategic priority given India’s renewable energy commitments and its historical dependence on imported solar modules, primarily from China. Investment commitments under the solar PV PLI reached Rs 52,942 crore, generating approximately 38,500 direct jobs as of June 30, 2025. The solar PV PLI is among the schemes where disbursements have been limited so far, reflecting the long gestation period of integrated cell and module manufacturing plants and the multi-year ramp-up required before incremental sales can be verified against the base year.
Part VThe Laggards: Textiles, Specialty Steel, ACC Battery, and Others
Textiles: Rs 10,683 Crore Outlay, Modest Disbursements
The PLI scheme for Textiles, approved in September 2021 with an outlay of Rs 10,683 crore, targets man-made fibre apparel, MMF fabrics, and technical textiles. These product categories were specifically chosen because India had limited presence in MMF and technical textile global markets despite being a major cotton textile producer, and because these are the faster-growing segments of global textile trade. Man-made fibre exports under PLI reached Rs 525 crore in FY 2024-25, up from Rs 499 crore in FY 2023-24. Technical textile exports reached Rs 294 crore, up from Rs 200 crore in the prior year.
The growth in MMF and technical textile exports is directionally positive but modest relative to the scheme’s Rs 10,683 crore outlay. The textiles PLI has faced structural headwinds: the MMF apparel segment requires a level of scale and speed that Indian manufacturers have found difficult to achieve rapidly in the face of competition from Bangladesh and Vietnam, which have longer-established MMF garment value chains, lower labour costs, and preferential trade access to the European Union under the GSP framework. Integration with PM MITRA (Mega Integrated Textile Region and Apparel) Parks is intended to provide the infrastructure and scale required, but these parks are still at various stages of development.
Specialty Steel: Rs 48 Crore Disbursed on Rs 6,322 Crore Outlay
The PLI scheme for Specialty Steel, with an outlay of Rs 6,322 crore and approved in July 2021, is among the most striking underperformers in terms of disbursement relative to outlay. As of March 2025, total disbursements stood at Rs 48 crore against the Rs 6,322 crore outlay, approximately 0.76 percent. Investments of approximately Rs 20,000 crore had been made out of the Rs 27,106 crore committed, generating direct employment for 9,000 workers. The Ministry of Steel has projected that Rs 2,000 crore will be disbursed by the end of the scheme tenure.
The low disbursement in specialty steel reflects a combination of factors: the high gestation period of steelmaking investments, the technical challenge of producing PLI-eligible specialty steel grades at commercial scale in India, and attrition among beneficiaries. Of the 58 original projects, 14 withdrew due to changes in business plans or project execution delays. A second round of the scheme attracted interest from 35 companies, with a further Rs 25,200 crore in investment commitments. The Ministry of Steel was in the process of selecting and signing MoUs with these new applicants as of March 2025, with an estimated Rs 3,600 crore in additional incentives projected for disbursement to the new cohort.
Advanced Chemistry Cell Battery: Still Awaiting Disbursements
The PLI scheme for Advanced Chemistry Cell battery storage, with an outlay of Rs 18,100 crore, is the scheme with the largest outlay that has produced zero or near-zero disbursements to date. This is not simply a case of poor scheme performance. ACC battery manufacturing requires greenfield gigafactory investments with three to five year construction and commissioning timelines, technology licensing agreements with global battery technology partners, and the establishment of upstream raw material supply chains for lithium, cobalt, nickel, and manganese, most of which India does not domestically produce. The PLI incentive structure for ACC batteries is tied to domestic sales of batteries, which can only be verified once a plant is operating at commercial scale. None of the approved projects had reached this stage as of the end of 2025. The scheme’s disbursement window effectively opens when gigafactories begin commercial production, which multiple approved projects have indicated is expected in 2026 and 2027.
Specialty steel and ACC battery reveal a design limitation: The PLI scheme’s performance-linked payment mechanism is theoretically robust, but it presupposes that beneficiaries can achieve meaningful incremental sales above their base year within the scheme’s active years. For capital-intensive sectors with long manufacturing gestation periods, the scheme’s five-to-six-year disbursement window may be too narrow. A steelmaker investing Rs 2,000 crore in a new specialty grade line faces a two-to-three year construction period, a one-year ramp-up, and then must demonstrate incremental sales above the base year while also absorbing the interest cost of its capital. For battery manufacturers building India’s first gigafactories from scratch, this pressure is even greater. The scheme’s architects appear to have applied a disbursement timeline calibrated for assembly-intensive manufacturing (electronics, mobile phones) uniformly to process-intensive and capital-intensive sectors where the timeline is structurally longer.
Drones: Small Scheme, Outsized Sectoral Impact
The drone PLI, with a total outlay of just Rs 120 crore over three years, is the smallest scheme by outlay. Its sectoral impact has been disproportionate. Drone sector turnover has increased seven-fold under the PLI. Driven largely by MSMEs and startups, the drone PLI catalysed a new manufacturing ecosystem that barely existed in India before 2021. Total disbursements from the drone scheme have been modest in absolute rupee terms (approximately Rs 2 crore in H1 FY25), but the economic multiplier from the sevenfold turnover growth relative to the Rs 120 crore outlay is arguably the highest of any PLI sector.
Part VIA Critical Assessment: The Gap Between Outlay and Disbursement
The Disbursement Trajectory Year by Year
PLI disbursements began in FY 2022-23, two years after the first schemes were launched, because most sectors required at least one year of eligible production before a first claim could be filed. Total disbursements in FY 2022-23 were Rs 2,900 crore. FY 2023-24 disbursements were Rs 9,721 crore. FY 2024-25 disbursements rose to Rs 10,114 crore. Cumulative disbursements as of September 30, 2025 reached Rs 23,946 crore, as stated by the Minister of State for Commerce and Industry in a written reply to the Rajya Sabha on December 12, 2025. By December 31, 2025, cumulative disbursements had reached Rs 28,748 crore as per the PIB press release of February 20, 2026.
-
FY 2022-23First year of PLI disbursements: Rs 2,900 crore
Payments to electronics and pharma sector beneficiaries who had completed their first full claim year. 8 sectors received disbursements; 6 sectors had no disbursements yet as their schemes were too new.
-
FY 2023-24Disbursements grow 3x to Rs 9,721 crore
Electronics and pharma claims scale up. Telecom, food processing, auto, and drones join the disbursement list. 10 sectors now actively disbursing. Total approved applications: 755.
-
FY 2024-25Rs 10,114 crore disbursed; electronics and pharma account for 70%+
Electronics: Rs 5,732 crore. Pharma: Rs 2,328 crore. Telecom: Rs 840 crore. Food: Rs 448 crore. Auto: Rs 322 crore. White goods, bulk drugs, medical devices, drones: smaller amounts.
-
Sep 30, 2025Cumulative disbursements hit Rs 23,946 crore across 12 sectors
Minister of State Jitin Prasada confirms in Rajya Sabha written reply that 12 sectors have received disbursements. Textiles and specialty steel among the last to show meaningful payouts.
-
Dec 31, 2025Cumulative total: Rs 28,748 crore (14.6% of Rs 1.97 lakh crore outlay)
836 approved applications. Rs 2.16 lakh crore investment. Rs 20.41 lakh crore in sales. Rs 8.3 lakh crore in exports. 14.39 lakh jobs. (PIB PRID 2230621, February 20, 2026)
What the Sector Concentration Reveals
The concentration of PLI disbursements in electronics and pharmaceuticals is not accidental. These two sectors share three characteristics that explain their lead over the others. First, both were launched earliest: electronics in April 2020 and pharma-related schemes in March to February 2020-21, giving them an 18-month to two-year head start on most other PLI sectors. Second, both involved product categories where India already had established manufacturing infrastructure that could be quickly scaled up by eligible companies, rather than requiring greenfield construction from scratch. Third, both operate in global markets where demand is large and relatively price-inelastic, meaning incremental production could find buyers without the beneficiary having to build a new market from zero.
The contrast with ACC batteries, specialty steel, and textiles reveals the opposite conditions: these sectors involve either entirely new manufacturing technologies in India (ACC batteries), long production gestation periods (specialty steel), or structural competitive disadvantages relative to incumbents in other countries (textiles). These sectors needed a different kind of policy support alongside PLI, including trade infrastructure, raw material supply chain development, and technology transfer mechanisms that the PLI incentive payment alone cannot provide.
The production target shortfall in FY25: Total production and sales by PLI beneficiaries through November 2024 stood at approximately Rs 14 lakh crore against the government’s target of Rs 15.52 lakh crore for the period up to FY 2024-25. This shortfall of approximately Rs 1.52 lakh crore, or roughly 10 percent below the cumulative production target, is the most direct indicator of underperformance against scheme objectives. It reflects primarily the underperformance of sectors like textiles, specialty steel, and food processing against their own PLI targets, even as electronics and pharma exceeded theirs. The overall scheme’s production trajectory is on track for most purposes, but the sector-level divergence between leaders and laggards is real and widening.
The Output Multiplier: What Each Rupee of Incentive Generated
A straightforward measure of PLI efficiency is the ratio of incremental production generated to every rupee of incentive paid. If total PLI production of Rs 20.41 lakh crore by December 2025 is attributed entirely to PLI, and Rs 28,748 crore has been disbursed to generate it, the output multiplier is approximately 71 times. For every rupee of incentive paid, approximately Rs 71 in production was recorded. This multiplier is high by global standards for industrial incentive programmes, though it should be interpreted with caution: not all of the Rs 20.41 lakh crore in PLI beneficiary sales represents incremental production attributable to the PLI, since some of it would have occurred in the absence of the scheme. The incremental contribution of PLI above the counterfactual baseline is inherently difficult to isolate, but even conservative estimates of additionality suggest a strongly positive output-to-incentive ratio.
Frequently Asked Questions
No, and the comparison requires context. The Rs 1.97 lakh crore outlay is the maximum payable over the entire multi-year life of all 14 schemes, most of which run for five to six years from their respective launch years. Most schemes were launched in 2020 and 2021. Disbursements began only in FY 2022-23. The scheme is therefore between three and five years into its disbursement phase as of December 2025, depending on the sector. The relevant comparison is not Rs 28,748 crore against Rs 1.97 lakh crore total outlay, but Rs 28,748 crore against the amount that should have been disbursed by December 2025 given the production targets set for each sector in each year. For electronics and pharmaceuticals, disbursement is broadly on track. For specialty steel, ACC batteries, and textiles, disbursements are materially below target, not because the money was not available but because beneficiaries did not achieve the incremental production thresholds required to qualify for it. This is the intended design of a performance-linked scheme: if production does not happen, the government does not pay. The relevant question is whether the production shortfall in lagging sectors reflects a design flaw in the scheme, a policy implementation gap, or an accurate assessment of India’s current manufacturing capabilities in those sectors.
Yes, provided the company is incorporated and registered in India under the Companies Act, 2013. Foreign-owned subsidiaries incorporated in India are eligible to apply. This is by design: several PLI sectors, particularly electronics and telecom, were structured specifically to attract global OEMs and their contract manufacturers to establish Indian production bases. Apple’s contract manufacturers Foxconn, Pegatron, and Wistron were among the early participants in the electronics PLI. Samsung applied and received approval in the same scheme. In the telecom sector, companies including Ericsson’s India unit and Nokia’s India manufacturing entity are active PLI beneficiaries. The eligibility of foreign-incorporated Indian subsidiaries reflects the scheme’s explicit objective of integrating India into global supply chains, not merely promoting domestic companies. What is not eligible is a foreign entity without an Indian legal entity: a company must be a legal person in India to apply. Partnership firms and sole proprietorships are also excluded regardless of ownership.
The consequences of missing a target are designed to be proportional rather than punitive in the first instance. If a beneficiary achieves incremental sales below its projected target for the claim year, the incentive paid is proportionally reduced: the company receives the incentive rate applied to whatever incremental sales it did achieve, not the projected figure. Missing a target in one year does not result in automatic disqualification from future years of the scheme, provided the cumulative investment commitment is being met. However, if a beneficiary misses its minimum investment threshold, which is a prerequisite for filing any claim in that year, it forfeits that year’s incentive entirely. Repeated failures to achieve investment milestones can lead to cancellation of the beneficiary’s MoU and removal from the scheme. In the specialty steel scheme, 14 of the original 58 projects withdrew from the scheme, primarily due to either a change in business plans or an inability to execute the committed investments. Withdrawal in this case was voluntary, not a government-initiated cancellation, but it effectively meant forfeiture of the company’s allocated incentive for the remaining scheme years.
India’s PLI is structurally similar in concept to several global manufacturing incentive frameworks, though each country’s programme has its own specific design. South Korea’s K-Semiconductor Strategy announced in 2021 committed approximately 450 trillion won (around $340 billion) in public and private investment over ten years in semiconductor manufacturing, with direct government subsidies of 6 percent on facility investments. The United States’ CHIPS and Science Act of 2022 allocated $52 billion in direct grants and incentives for semiconductor manufacturing on US soil. Taiwan’s government has historically subsidised TSMC and other semiconductor makers through preferential land allocation, power pricing, and capital cost support. China’s national IC fund (the Big Fund) has deployed over $50 billion in equity investments in domestic semiconductor companies. The key distinction between PLI and most of these comparators is that PLI is an incremental revenue incentive, not a capital grant or equity stake. Competing countries often deploy direct capital subsidies that de-risk investment and reduce construction cost, which is why semiconductor fabs in the US under CHIPS Act grants and in Japan under METI support can justify higher construction costs than would be commercial without subsidy. India’s PLI does not offset capital costs: it rewards production after the fact. For sectors requiring very large capital investments (ACC batteries, semiconductors), this design may be less effective than direct capital support unless complemented by other instruments like the India Semiconductor Mission’s direct incentives on facility capital costs.
As of June 2026, there has been no official Union Cabinet announcement of a PLI 2.0 expansion to new sectors. The Union Budget for FY 2025-26 increased the total PLI scheme allocation by approximately 76 percent compared to the previous year’s actual disbursements, reaffirming the government’s commitment to existing sectors rather than announcing new ones. Within existing sectors, there have been adjustments: the automobile sector saw a reduced allocation in FY26 while electronics, semiconductors, and solar received increased funding. The specialty steel scheme invited a second round of applicants, with 35 companies showing interest and fresh MoUs being processed. The food processing scheme extended its beneficiary list and added millets as an eligible category. The most likely near-term evolution of PLI policy is a deepening of existing schemes, including extensions for sectors where beneficiaries are still in investment ramp-up phases, rather than a broadening to entirely new sectors. Semiconductors are technically covered under the separate India Semiconductor Mission rather than the PLI framework, though both programmes share the same performance-linked philosophy.
Rs 28,748 Crore Out of Rs 1.97 Lakh Crore: What Five Years of PLI Actually Tells You
Five years after its launch, India’s Production Linked Incentive scheme has produced results that are genuine but unevenly distributed. Electronics and pharmaceuticals have delivered structural transformations: India is now the world’s second-largest mobile phone manufacturer, a net exporter of bulk drugs, and a producer of advanced medical devices that were previously imported entirely. Telecom has achieved six-fold sales growth and enabled an indigenously developed 4G technology stack. Solar PV has attracted over Rs 52,942 crore in investment commitments toward 48 GW of integrated manufacturing capacity. Automobiles has attracted Rs 67,690 crore in committed investment directed at electric vehicle and advanced automotive technology. These are not trivial outcomes.
The uncomfortable reality is that the sectors at the top of the disbursement table are the ones that needed PLI least. Electronics, pharmaceuticals, and telecom were all sectors where India had existing capabilities, established global demand, and a competitive cost structure that made scaling up commercially viable with or without an incentive. PLI accelerated their growth and deepened their value chains. The sectors at the bottom of the disbursement table, specialty steel, ACC batteries, textiles, are the sectors where India’s manufacturing gaps are most structural and where the PLI’s output-linked payment mechanism, by design, does not pay until the structural gap has already been bridged. For these sectors, an incentive payable only after successful production cannot address the upstream barriers of technology access, raw material supply chains, and infrastructure that prevent production from happening in the first place.
This is the core analytical tension in the PLI design. A scheme that pays for output incentivises output efficiently. It does not incentivise the investment in capability required to produce output for the first time. For India’s most critical manufacturing ambitions, including batteries, semiconductors, and specialty materials, PLI will need to be complemented by direct capital support, technology partnerships, and supply chain investments that operate upstream of the moment at which output is achieved. The Rs 1.97 lakh crore outlay is not the measure of the scheme’s ambition. The Rs 28,748 crore disbursed in five years is not the measure of its success. The relevant measure is whether the manufacturing capabilities being built under PLI will still be globally competitive when the incentive payments end.
Disclaimer: This article is for informational and educational purposes only and is current as of June 9, 2026. Nothing in this article constitutes investment advice.
