India's Production-Linked Incentive scheme has attracted ₹1.76 lakh crore investment, transforming manufacturing across electronics, pharmaceuticals, automotive, and renewable energy sectors.
Introduction:
India is witnessing a manufacturing revolution that's reshaping its economic landscape and positioning the country as a formidable global production hub. At the heart of this transformation lies the Production-Linked Incentive (PLI) scheme – a strategic policy initiative that has fundamentally changed how the world views Indian manufacturing capabilities.
Launched in March 2020 with an impressive outlay of ₹1.97 lakh crore, the PLI scheme has evolved from a modest three-sector initiative to a comprehensive 14-sector manufacturing catalyst that's delivering unprecedented results. By March 2025, the scheme has attracted actual investments of ₹1.76 lakh crore, generated over 12 lakh direct and indirect jobs, and propelled total production to an astounding ₹16.5 lakh crore.
(toc) #title=(Table of Content)
The PLI Framework:
Unlike traditional subsidy models that reward promises, the PLI scheme operates on a revolutionary principle: reward actual production, not just investment commitments. This performance-based approach links financial incentives ranging from 4% to 6% of incremental sales to measurable outcomes like increased production, job creation, and export growth.
The scheme's sector-specific design covers 14 critical industries:
- Large-Scale Electronics Manufacturing (including mobile phones)
- Pharmaceutical drugs and medical devices
- Automotive and auto components
- Advanced chemistry cell batteries
- Textiles (MMF apparel, fabrics, and technical textiles)
- Food processing
- Solar PV modules
- White goods (air conditioners and LED lights)
- Specialty steel
- Telecommunication and networking products
- Electronic components and semiconductors
- Drones and drone components
Electronics Manufacturing:
The electronics sector stands as the crown jewel of the PLI scheme's success. The transformation has been nothing short of spectacular. Production surged by 146%, growing from ₹2.13 lakh crore in FY 2020-21 to ₹5.25 lakh crore in FY 2024-25.
Mobile Phone Manufacturing
India's journey from a mobile phone importer to a manufacturing powerhouse exemplifies the PLI scheme's effectiveness. The country now produces 33 crore mobile units annually, compared to just 5.8 crore units in 2014-15, while imports dropped dramatically from 21 crore units to merely 0.3 crore units.
Mobile phone exports have skyrocketed by 775%, growing from ₹22,870 crore to ₹2 lakh crore, with smartphone exports alone crossing ₹1 trillion in just five months of 2025. Major global players like Apple, Samsung, and Xiaomi have established significant manufacturing operations in India, with Apple's contract manufacturers (Foxconn, Wistron/Tata, and Pegatron) leading the charge alongside Samsung in meeting ambitious production targets.
Global Supply Chain Integration
The PLI scheme has successfully integrated India into global electronics value chains. Major companies have shifted production to India not just for cost advantages but also to leverage India's skilled workforce and growing domestic market. Foreign Direct Investment in electronics increased by 254% since the scheme's inception, demonstrating international confidence in India's manufacturing capabilities.
Pharmaceutical Sector:
The pharmaceutical industry's transformation under the PLI scheme represents one of India's most strategic victories in reducing critical import dependencies. India has transitioned from being a net importer of bulk drugs (₹1,930 crore deficit in FY 2021-22) to a net exporter with a surplus of ₹2,280 crore in FY 2024-25.
Critical Drug Manufacturing
The PLI scheme for pharmaceuticals, with its ₹15,000 crore outlay, has enabled India to manufacture essential drugs that were previously imported. 32 projects have been completed under the bulk drugs PLI scheme, creating an installed capacity of 56,679 metric tons per annum. This includes critical antibiotics like Penicillin G and other essential drugs.
Pharmaceutical sales under the PLI scheme have crossed ₹2.66 lakh crore in the first three years, with exports accounting for ₹1.70 lakh crore, which representing 64% of total sales. The domestic value addition in the sector reached 83.7% by March 2025, significantly reducing dependence on imported raw materials.
Medical Device Manufacturing
The medical device segment has witnessed remarkable technology transfer, with global companies establishing manufacturing capabilities for sophisticated equipment. India now locally manufactures 39 types of medical devices, including high-end equipment like CT scanners, MRI machines, Linear Accelerators (LINAC), and heart valves.
Automotive Revolution:
The automotive sector's PLI scheme, with an outlay of ₹25,938 crore, has attracted committed investments worth ₹67,690 crore, which is far exceeding the initial target. As of March 2024, ₹14,043 crore has been invested, generating over 28,884 jobs.
Electric Vehicle and Clean Technology Focus
The automotive PLI scheme specifically targets Advanced Automotive Technology (AAT) vehicles and components, aligning with India's vision to become a global EV and clean-tech hub. The scheme supports 19 categories of AAT vehicles and 103 categories of AAT components, complementing the government's FAME (Faster Adoption and Manufacturing of Electric Vehicles) initiative.
Over 115 companies applied for the automotive PLI scheme, with 85 approved for incentives, demonstrating strong industry interest in India's automotive manufacturing potential.
Renewable Energy:
India's solar manufacturing capacity has received a massive boost through the PLI scheme for high-efficiency solar PV modules. With a total outlay of ₹24,000 crore across two tranches, the scheme has achieved remarkable success in building domestic solar manufacturing capabilities.
Solar Capacity Achievement
By June 30, 2025, the PLI scheme has resulted in:
- 18.5 GW of solar module manufacturing capacity
- 9.7 GW of solar cell capacity
- 2.2 GW of ingot-wafer capacity
- 3.2 GW of fully integrated thin-film solar PV module manufacturing capacity
Tranche I awarded 8,737 MW capacity to three companies, while Tranche II allocated 39,600 MW capacity to 11 companies, bringing total investments of ₹93,041 crore and generating over 1 lakh direct and indirect jobs.
Textile Sector:
The textile PLI scheme, with its ₹10,683 crore outlay, focuses on promoting manufacturing of Man-Made Fibre (MMF) apparel, MMF fabrics, and technical textiles. The scheme is designed to attract both large manufacturers and MSMEs, with 74 companies selected including 24 MSME category companies.
Investment and Job Creation Projections
The textile PLI scheme projects:
- Investment of ₹28,711 crore
- Turnover of ₹2,16,760 crore including exports
- Creation of over 7.5 lakh employment opportunities
The scheme operates through two parts: Part 1 requires minimum investment of ₹300 crore and turnover of ₹600 crore, while Part 2 targets smaller players with ₹100 crore investment and ₹200 crore turnover thresholds.
Employment Generation:
The PLI scheme has emerged as a significant job creator, generating over 12 lakh direct and indirect employment opportunities. The employment impact extends beyond metros to Tier-2 and Tier-3 cities, fostering inclusive economic development.
Sector-wise Employment Breakdown
Key employment contributors include:
- Mobile phones, food processing, and pharmaceuticals account for over 75% of jobs created
- Food processing sector has nearly achieved its target, creating 2.45 lakh jobs against a target of 2.5 lakh jobs by 2026-27
- Automotive sector generated over 28,884 jobs as of March 2024
The scheme's original target of creating 60 lakh new jobs over five years demonstrates the government's commitment to employment-led growth.
Export Performance:
The PLI scheme has significantly enhanced India's export competitiveness across multiple sectors. Total exports attributed to PLI participants have exceeded ₹4 lakh crore, with electronics leading the charge.
Remarkable Export Growth
Electronics exports have been the standout performer:
- Electronics goods exports rose by 40.63% in April-August 2025
- Mobile phone exports reached $24.1 billion in FY25, up from just $200 million in FY18
- Overall electronics exports surged from ₹38,263 crore in FY14 to ₹2.41 lakh crore in FY24
Pharmaceutical exports under PLI schemes contributed ₹1.70 lakh crore out of total sales of ₹2.66 lakh crore, representing 64% export orientation.
Global Manufacturing Hub Positioning:
The PLI scheme has strategically positioned India as a credible alternative to China in global supply chains. India's manufacturing PMI remains well above 50, indicating strong growth momentum compared to other emerging economies including China.
Competitive Advantages Emerging
Cost competitiveness: While China's average manufacturing wages exceeded $9 per hour in 2024, India maintains wages below $3 per hour in most regions, providing significant cost advantages for labor-intensive manufacturing.
Supply chain diversification benefits: The global "China+1" strategy has favored India, with companies seeking to reduce dependence on single-country sourcing. The PLI schemes can potentially attract over $520 billion in investment and generate more than 6 million jobs by 2025.
FDI attraction: India recorded FDI inflows exceeding $50 billion in FY 2024-25, reflecting a 13% rise. Manufacturing sector FDI equity inflow increased by 69%, rising from $98 billion (2004-2014) to $165 billion (2014-2024).
Investment Performance:
The PLI scheme's investment performance has consistently exceeded initial projections. Committed investments reached ₹1.61 lakh crore by November 2024, with realized investments climbing to ₹1.76 lakh crore by March 2025.
Sector-wise Investment Success
Pharmaceutical sector investment exceeded targets:
- Bulk drugs PLI: Actual investments of ₹4,709 crore against committed ₹3,938.50 crore
- Broader pharma PLI: Investments of ₹38,543 crore against committed ₹17,275 crore – more than doubling the target
Electronics sector: Incremental investments of ₹8,390 crore by June 2024, leading to production of ₹5,14,960 crore.
Automotive sector: Attracted ₹67,690 crore in committed investments against the scheme outlay, demonstrating strong industry confidence.
Technology Transfer and Innovation:
The PLI scheme has facilitated significant technology transfer and innovation in Indian manufacturing. Global technology giants have established manufacturing units in India, transferring critical technologies for sophisticated products.
Notable Technology Transfer Examples
Medical devices: Global companies transferred technology for manufacturing CT scanners, MRI machines, and other high-end medical equipment locally.
Telecommunications: 60% import substitution achieved in telecom products, with global tech companies setting up manufacturing units and turning India into an exporter of 4G and 5G equipment.
Semiconductors: The India Semiconductor Mission, with its ₹76,000 crore budget, provides up to 50% financial support for semiconductor and display manufacturing.
Challenges and Future Outlook:
Despite remarkable success, the PLI scheme faces important challenges that need addressing to sustain long-term growth.
Key Challenges
Post-PLI sustainability: Samsung's completion of its five-year PLI term raises questions about whether companies will maintain capacity and output after incentives end.
Manufacturing cost disability: Without PLI benefits, India faces a manufacturing cost differential of 10% compared to Vietnam and 15% compared to China.
Continued import dependence: Despite pharmaceutical PLI success, India's reliance on Chinese APIs increased from 64% to 71% by value between FY14 and FY23.
Future Policy Directions
The government is considering PLI 2.0 to address sustainability concerns and maintain manufacturing momentum. Increased budget allocations for key sectors in 2025-26 reaffirm the government's commitment to strengthening domestic manufacturing.
Economic Impact
The PLI scheme's broader economic impact extends far beyond individual sectors. Total sales by PLI participants exceeded ₹16.5 lakh crore, reflecting impressive growth across electronics, pharmaceuticals, automotive, and textiles.
GDP and Economic Contribution
The manufacturing sector's enhanced contribution supports India's goal to increase manufacturing's share to 25% of GDP. The scheme has attracted a fresh wave of FDI, endorsing India as a preferred destination for high-value manufacturing in the evolving global scenario.
Ecosystem development: The PLI scheme has fostered additional ecosystem development across Tier-2 and Tier-3 cities, with anchor units developing new supplier and vendor networks throughout value chains.
Success Stories:
Electronics Manufacturing
Apple's India success: Contract manufacturers like Foxconn have significantly expanded operations, with India becoming a major production base for Apple's global supply chain.
Samsung's manufacturing journey: Samsung increased smartphone exports from India to $4.4 billion in FY25, up from $1.2 billion in FY21, demonstrating the scheme's export promotion effectiveness.
Pharmaceutical Industry
Bulk drug manufacturing independence: India successfully established manufacturing capabilities for 26 key starting materials, APIs, and intermediates, reducing critical import dependencies.
Medical device innovation: Local manufacturing of 54 unique medical devices including sophisticated equipment demonstrates successful technology absorption.
Renewable Energy
Solar capacity building: Creation of 18.5 GW solar module capacity positions India as a significant player in global solar equipment manufacturing.
Frequently Asked Questions (FAQs)
Q1: What is the total investment attracted by the PLI scheme?
A1: The PLI scheme has attracted actual investments of ₹1.76 lakh crore by March 2025, with committed investments reaching ₹1.61 lakh crore by November 2024.
Q2: How many jobs has the PLI scheme created?
A2: The PLI scheme has generated over 12 lakh direct and indirect employment opportunities across 14 sectors, with mobile phones, food processing, and pharmaceuticals being the major contributors.
Q3: Which sectors have performed best under the PLI scheme?
A3: Electronics manufacturing, pharmaceuticals, and automotive sectors have shown exceptional performance. Electronics production grew by 146%, pharmaceuticals transitioned from net importer to net exporter, and automotive sector attracted investments far exceeding targets.
Q4: How has the PLI scheme impacted India's exports?
A4: PLI participants have contributed over ₹4 lakh crore in exports, with mobile phone exports reaching $24.1 billion in FY25 and pharmaceutical exports accounting for ₹1.70 lakh crore.
Q5: What makes the PLI scheme different from traditional subsidies?
A5: Unlike traditional subsidies, the PLI scheme is performance-based, linking incentives of 4-6% to actual production and incremental sales rather than just promises or investments.
Q6: Which global companies have benefited from the PLI scheme?
A6: Major global companies including Apple (through contract manufacturers like Foxconn, Wistron/Tata, Pegatron), Samsung, Dixon Technologies, and various pharmaceutical MNCs have established significant operations under the scheme.
Q7: How does the PLI scheme support MSMEs?
A7: The scheme includes specific provisions for MSMEs, with sectors like textiles having dedicated MSME categories. 24 out of 74 selected textile companies are MSMEs, and 13 pharmaceutical projects are undertaken by MSMEs.
Q8: What is the future outlook for the PLI scheme?
A8: The government is considering PLI 2.0 to address post-incentive sustainability and has increased budget allocations for 2025-26, demonstrating continued commitment to manufacturing growth.
Sources
Multiple government sources, industry reports, and official press releases were referenced for this comprehensive analysis, including data from the Ministry of Commerce and Industry, Press Information Bureau, and various sector-specific government departments. Few of them are listed below.
Government Official Sources
Press Information Bureau (PIB)
Ministry Websites
Business and Economic News Sources
What are your thoughts on India's manufacturing transformation through the PLI scheme? Have you witnessed the impact of this policy in your sector or region? Share your experiences and insights in the comments below. Don't forget to follow us on our social media channels for more updates on India's economic development and subscribe to our newsletter for regular insights on policy impacts and business opportunities.
You might also like our Article "Rare Earth Elements: How India Can Break China's Monopoly".