The Production Linked Incentive (PLI) Scheme is one of India’s most significant industrial policy initiatives. It is a performance-based incentive programme where the government provides eligible manufacturers with a financial reward ranging from 4 percent to 18 percent on incremental sales achieved above a defined base year. Introduced in 2020, the scheme spans 14 priority sectors with a total outlay of Rs. 1.97 lakh crore. It aims to generate Rs. 30 lakh crore in additional production and create 6 lakh direct jobs by 2030, according to the Ministry of Commerce and Industry.
By 2026, the scheme will have already delivered strong outcomes, including Rs. 7.5 lakh crore in production, Rs. 3.2 lakh crore in investments, and 11.5 lakh direct jobs. This guide explains the PLI scheme, its objectives, working mechanism, incentive structure, sector coverage, achievements, eligibility criteria, documentation, application process, challenges, MSME impact, and financing support through Bajaj Finserv.
Key takeaways from this guide:
- Performance-linked incentive: The PLI Scheme rewards manufacturers with 4 percent to 18 percent of incremental sales above the base year benchmark of FY 2019 to 20.
- Budget allocation: The total outlay stands at Rs. 1.97 lakh crore across 14 sectors, typically implemented over 5 to 6 years.
- Progress so far: By 2025, the scheme has resulted in Rs. 7.5 lakh crore in production, Rs. 3.2 lakh crore in investments, and 11.5 lakh jobs.
- Sector coverage: It includes mobile manufacturing, pharmaceuticals, automobiles, electronics, food processing, textiles, solar modules, advanced batteries, drones, speciality steel, telecom, medical devices, white goods, and advanced chemistry cells.
- Eligibility criteria: Indian registered companies must meet sector-specific investment thresholds and achieve incremental sales targets to qualify.
- MSME participation: Around 176 MSMEs have benefited, especially in sectors such as pharma, telecom, food processing, textiles, and drones.
- Financing support: Bajaj Finserv Business Loan can help manufacturers meet investment requirements and scale operations under the scheme.
What is the Production Linked Incentive (PLI) scheme?
The Production Linked Incentive Scheme is a government initiative that offers direct financial incentives to manufacturers based on the increase in their sales compared to a defined base year. In simple terms, businesses that produce and sell more than the benchmark level receive a percentage of their additional sales as an incentive. The greater the incremental output, the higher the incentive earned.
· Simple analogy: The scheme works like a performance bonus structure. Just as employees receive incentives for exceeding targets, manufacturers receive financial rewards when they surpass their production baseline. Through this approach, the government shares part of the expansion risk and encourages capacity growth in the manufacturing sector.
· Key statistics: With an investment of Rs. 1.97 lakh crore, the PLI Scheme is expected to generate around Rs. 30 lakh crore in incremental production over five years, reflecting a strong multiplier effect. As of March 2025, production under the scheme has already crossed Rs. 7.5 lakh crore, with investments reaching Rs. 3.2 lakh crore, according to the Ministry of Commerce and Industry.
PLI Scheme vs Make in India vs Startup India: key differences
The PLI Scheme is often compared with other government initiatives such as Make in India and Startup India, but each serves a distinct purpose. Here is a simplified comparison to understand how they differ:
| Factor | PLI Scheme | Make in India | Startup India |
| What it is | Performance based incentive where the government rewards manufacturers with a percentage of incremental sales over a base year | Broad policy initiative aimed at positioning India as a global manufacturing hub | Ecosystem driven initiative focused on encouraging entrepreneurship, innovation, and startup growth |
| Launched | 2020, initially for mobile manufacturing and later expanded to 14 sectors | September 2014 | January 2016 |
| Core mechanism | Direct financial incentive of 4 to 18 percent on incremental sales, paid annually for 4 to 6 years | Policy support through ease of doing business, FDI reforms, infrastructure development, and sector specific measures | Benefits such as tax exemptions, funding through Fund of Funds, simplified compliance, and mentorship support |
| Who benefits | Medium and large manufacturers across 14 sectors meeting defined investment and sales criteria | Manufacturing sector as a whole through improved business environment | DPIIT recognised startups across sectors, especially early stage and innovation driven ventures |
| Financial benefit | Direct monetary support with a total outlay of Rs. 1.97 lakh crore | Indirect benefits such as better infrastructure, policy clarity, and faster approvals | Tax holidays, capital gains exemptions, and access to a Rs. 10,000 crore Fund of Funds |
| Focus | Encouraging higher production and manufacturing output in India | Attracting investment and strengthening India’s manufacturing ecosystem | Promoting innovation, entrepreneurship, and startup development |
| Examples | Apple through Foxconn and Pegatron, Samsung, Tata Electronics, Sun Pharma, Cipla | Large scale investments such as Foxconn’s expansion and global companies exploring India entry | Ola Electric, Zepto, Groww, Razorpay |
Key insight: These initiatives work together rather than compete with each other. Make in India builds the overall manufacturing environment, PLI provides financial incentives to boost production, and Startup India supports innovation and entrepreneurship. A manufacturing startup can leverage all three simultaneously for growth.
Key objectives of the Production Linked Incentive Scheme
5 PLI Scheme objectives with measurable outcomes and recent progress:
- Strengthen domestic manufacturing: The scheme aims to reduce India’s reliance on imports, which exceed Rs. 40 lakh crore annually. In electronics, mobile phone imports have declined as domestic production has grown significantly, crossing Rs. 4.1 lakh crore in FY2024.
- Drive investment inflows: As of March 2025, PLI has attracted investments worth Rs. 3.2 lakh crore, surpassing the initial target of Rs. 2.1 lakh crore. Global companies such as Apple, Samsung, and Foxconn have expanded manufacturing operations in India under this initiative.
- Boost export competitiveness: Smartphone exports have risen sharply to over Rs. 1.2 lakh crore in FY2024, while pharmaceutical exports have crossed Rs. 1.8 lakh crore. The long-term goal is to position India among the top global producers in electronics and pharmaceuticals by 2030.
- Create large-scale employment: The scheme has already generated around 11.5 lakh direct jobs by FY2025. The broader target is to create approximately 60 lakh direct and indirect jobs across sectors by 2030.
- Integrate with global supply chains: PLI is enabling Indian manufacturers to become part of global production networks. For instance, India now contributes a growing share of global smartphone production, with companies like Apple increasing their manufacturing footprint in the country.
How does the Production Linked Incentive (PLI) scheme work?
How the PLI Scheme operates is explained step by step with a practical example from mobile manufacturing:
- Base year defined: The government sets a base year, typically FY 2019 to 20. A company’s sales this year act as the benchmark. For example, if a company recorded Rs. 500 crore in sales, this becomes the baseline.
- Incremental sales measured: Each year, current sales are compared with the base year. If sales rise to Rs. 800 crore, the incremental value becomes Rs. 300 crore.
- Incentive calculation: The applicable incentive rate, usually between 4 percent and 6 percent for mobile manufacturing, is applied to incremental sales. In this case, a 5 percent rate on Rs. 300 crore results in an incentive of Rs. 15 crore.
- Eligibility criteria check: Companies must meet minimum investment thresholds and achieve required incremental sales targets. Both conditions must be fulfilled to qualify for incentives.
- Incentive period: Benefits are provided over a fixed duration, typically five years. Companies that consistently increase production can receive incentives each year.
- Application and approval: Businesses apply through the designated government portal. After evaluating investment plans and eligibility, the government issues an approval outlining incentive terms.
- Claim and disbursement: At the end of each financial year, companies submit audited sales data and compliance documents. Once verified, the incentive amount is credited directly to the company’s bank account.
PLI incentive rates and disbursement
Complete PLI incentive rates across all 14 sectors with investment thresholds and outlay:
| Sector | Nodal ministry | Total PLI outlay | Minimum investment | Incentive rate | Duration |
| Mobile manufacturing and electronic components | MeitY | Rs. 40,951 crore | Rs. 200 crore for large players and Rs. 50 crore for MSMEs in components | 4 percent to 6 percent | 5 years |
| Critical KSMs, drug intermediates and APIs | DPIIT Pharma | Rs. 6,940 crore | Rs. 25 crore to Rs. 250 crore based on category | 5 percent to 10 percent | 6 years |
| Pharmaceutical drugs formulations | Ministry of Health and Family Welfare | Rs. 15,000 crore | Rs. 250 crore for Category 1 and Rs. 100 crore for Category 2 | 3 percent to 10 percent | 6 years |
| Medical devices | DPIIT | Rs. 3,420 crore | Rs. 5 crore to Rs. 100 crore | 5 percent to 8 percent | 5 years |
| Automobiles and auto components | Ministry of Heavy Industries | Rs. 25,938 crore | Rs. 50 crore to Rs. 1,000 crore based on scale | 8 percent to 18 percent with higher rates for EVs | 5 years |
| Advanced chemistry cell batteries | Ministry of Heavy Industries | Rs. 18,100 crore | Rs. 225 crore per GWh capacity | Around 20 percent of capital expenditure equivalent | 5 years |
| Specialty steel | Ministry of Steel | Rs. 6,322 crore | Rs. 100 crore to Rs. 400 crore | 4 percent to 12 percent | 5 years |
| Telecom and networking products | Department of Telecommunications | Rs. 12,195 crore | Rs. 10 crore to Rs. 100 crore | 6 percent to 7 percent | 5 years |
| Electronic and technology products | MeitY | Rs. 5,000 crore | Rs. 50 crore to Rs. 250 crore | 4 percent to 6 percent | 4 years |
| White goods such as ACs and LEDs | DPIIT | Rs. 6,238 crore | Rs. 50 crore for ACs and Rs. 10 crore for LEDs | 4 percent to 6 percent | 5 years |
| Food processing | Ministry of Food Processing Industries | Rs. 10,900 crore | Rs. 10 crore to Rs. 250 crore | 3 percent to 10 percent | 6 years |
| Textiles including MMF and technical textiles | Ministry of Textiles | Rs. 10,683 crore | Rs. 300 crore for MMF fabrics and Rs. 100 crore for apparel | 3 percent to 15 percent | 5 years |
| Solar PV modules | Ministry of New and Renewable Energy | Rs. 24,000 crore | Minimum 1 GW manufacturing capacity | 4 percent to 5 percent of net sales | 5 years |
| Drones and drone components | Ministry of Civil Aviation | Rs. 120 crore | 15 percent to 25 percent of component purchase cost | 20 percent for first three years and 16 percent for next two years | 3 to 5 years |
List of sectors covered under the Production Linked Incentive (PLI) scheme
14 PLI sectors with strategic rationale and long-term goals:
| Sector category | Sectors included | Strategic rationale | India’s global ambition |
| Electronics and technology | Mobile manufacturing, electronic components, telecom products, electronic and technology products | High import dependence in electronics and supply chain vulnerabilities highlighted during global disruptions | Become the world’s second largest smartphone manufacturer and build a strong domestic component ecosystem |
| Healthcare and life sciences | Pharmaceutical formulations, APIs and intermediates, medical devices | Heavy reliance on imports for critical inputs and medical devices | Achieve self sufficiency in key APIs and become a leading global medical devices manufacturer |
| Mobility and clean energy | Automobiles, auto components, advanced batteries | Lack of domestic battery manufacturing and rising EV demand | Build large scale battery capacity and emerge as a global EV manufacturing hub |
| Sustainability and green technology | Solar PV modules, drones and components | High import dependence in solar equipment and strategic importance of drones | Achieve domestic solar manufacturing capability and develop a competitive drone ecosystem |
| Core industry and exports | Specialty steel, textiles, food processing | Import dependence in specialty steel and declining share in textiles exports | Strengthen export competitiveness and expand India’s presence in global markets |
PLI Scheme achievements and results as of 2026
Key outcomes of the PLI Scheme based on recent government data:
| Achievement metric | Original target | Achieved by March 2025 | Top performing sector |
| Total production and sales | Rs. 30 lakh crore | Rs. 7.5 lakh crore cumulative | Mobile manufacturing with Rs. 4.1 lakh crore production in FY2024 |
| Investments attracted | Rs. 2.10 lakh crore | Rs. 3.20 lakh crore exceeding target | Automobiles and auto components with over Rs. 45,000 crore commitments |
| Direct employment | 60 lakh jobs by 2030 | 11.5 lakh jobs created | Food processing and textiles for labour intensity, mobile manufacturing for scale |
| Incremental exports | Rs. 10 lakh crore | Rs. 3.2 lakh crore exports | Smartphones with Rs. 1.2 lakh crore exports in FY2024 |
| Beneficiary companies | Expected 500 plus | 733 approved companies | Mobile manufacturing with global players and domestic firms |
| MSME participation | Not initially defined | 176 MSMEs benefited | Strong participation in pharmaceuticals, medical devices, and drones |
Sector highlights: India’s smartphone production reached Rs. 4.1 lakh crore in FY2024, positioning the country as the world’s second-largest manufacturer. Global companies have expanded operations in India, while domestic firms are strengthening supply chain capabilities across batteries, solar, and electronics manufacturing.
Benefits and advantages of PLI for Indian manufacturing
7 key benefits of the PLI Scheme supported by measurable outcomes:
- Investment acceleration: The scheme has attracted investments worth over Rs. 3.2 lakh crore, creating strong momentum in manufacturing. Global companies such as Apple, Samsung, and Foxconn have expanded their India operations, signalling long-term confidence in the market.
- Export growth: PLI-driven sectors have significantly improved export performance. Smartphone exports have crossed Rs. 1.2 lakh crore, while pharmaceutical exports have strengthened further due to improved cost efficiency and domestic production capabilities.
- Lower import dependence: India has reduced its reliance on imports in key sectors. Mobile manufacturing, which earlier depended heavily on imports, has now turned into a net export segment. Similar shifts are visible in pharmaceuticals, solar equipment, and medical devices.
- Technology advancement: The scheme encourages companies to invest in research and advanced manufacturing. Sectors such as batteries, solar modules, and electronics are witnessing increased innovation and capability building within India.
- Employment generation: Over 11.5 lakh direct jobs have been created so far, with several more indirect opportunities emerging across supply chains. Labour-intensive sectors such as textiles and food processing are expected to drive further job creation.
- Supply chain ecosystem development: Large manufacturers entering India are bringing their supplier networks along, helping build a strong domestic ecosystem. This is strengthening India’s position in global supply chains.
- Emerging sector growth: New industries such as drones, advanced batteries, and solar manufacturing are gaining traction, creating new opportunities and strengthening India’s industrial base.
Eligibility for Production Linked Incentive (PLI) scheme
PLI Scheme eligibility criteria with general and sector-specific requirements:
| Eligibility criterion | General requirement | Sector specific variation | Practical notes |
| Company registration | Must be a company registered in India under the Companies Act 2013 | Applicable across all sectors, including Indian subsidiaries of foreign companies | Joint ventures and wholly owned subsidiaries are eligible, allowing global companies to participate through Indian entities |
| Minimum investment | Investment thresholds vary from Rs. 5 crore to Rs. 200 crore or higher depending on sector | Mobile manufacturing, pharmaceuticals, automobiles, and other sectors have different thresholds | Investment should be in plant, machinery, and research, excluding working capital and land costs |
| Incremental sales targets | Must achieve year on year growth in sales above the base year benchmark | Some sectors require minimum incremental thresholds for incentive eligibility | Companies must maintain certified records of incremental sales for claim submission |
| Net worth requirement | Certain schemes require a minimum financial strength based on net worth | Varies by sector and category, with lower thresholds for smaller players | Based on latest audited financial statements and must be verified before applying |
| Manufacturing in India | Only goods produced within India qualify for incentives | Some sectors require a defined level of domestic value addition | Proper documentation of production and sourcing is necessary for verification |
| Sector specific criteria | Additional requirements related to technology, product type, or localisation | Conditions vary across sectors such as automobiles, solar, and textiles | It is important to review detailed scheme guidelines before applying |
Documents required for Production Linked Incentive (PLI) scheme
Complete list of documents needed for a PLI application, along with their purpose:
- Certificate of incorporation: Confirms that the company is legally registered in India. This document is mandatory across all PLI schemes and must be current and valid.
- Detailed business plan: A comprehensive plan covering a five to six-year horizon, including product details, manufacturing capacity, investment schedule, projected sales, employment targets, technology roadmap, and supply chain strategy. This is a critical document and plays a major role in approval decisions.
- Audited financial statements: Includes balance sheet, profit and loss statement, and cash flow statements for the last three years, certified by a Chartered Accountant. These are used to assess financial strength and track record.
- PAN card: Required for tax identification and to verify the company’s legal status in India.
- GST registration certificate: Establishes that the company is registered under GST, which is essential for manufacturing operations and verification of sales data.
- Memorandum of Association: Ensures that the company’s authorised business activities include the manufacturing category for which it is applying under PLI.
- Board resolution: A formal approval from the Board of Directors authorising a representative to apply for the scheme and execute related documents.
- Investment plan and proof of funds: Includes bank statements, loan sanction letters, or equity commitments that demonstrate the company’s ability to fund the proposed investment. This is important for establishing credibility.
Application process for Production Linked Incentive (PLI) scheme
PLI application process explained step-by-step with practical considerations:
- Track scheme notifications: Regularly monitor announcements from the relevant ministry and DPIIT. Application windows are typically open for a limited period, so timely awareness is essential.
- Register on the portal: Sign up on the designated government portal for the respective sector. Credentials created at this stage are used for all future submissions and claims.
- Complete application and upload documents: Fill in all required details accurately and upload supporting documents. Consistency between projections, financials, and application data is critical to avoid rejection.
- Application evaluation: The ministry reviews submissions based on financial capability, investment plans, technology readiness, and alignment with scheme objectives. This stage may take a few months.
- Approval and issuance of letter: Approved applicants receive a formal letter outlining incentive rates, commitments, timelines, and compliance requirements.
- Submit annual claims: Companies must file yearly claims with certified sales data, investment proof, and compliance declarations through the same portal.
- Verification and disbursement: Authorities verify submitted data and may conduct audits or inspections. Once approved, incentives are credited directly to the company’s account.
Challenges, issues, and criticisms of the PLI scheme
Key challenges associated with the PLI Scheme, along with practical considerations:
- High investment requirements: Large minimum investment thresholds in some sectors limit participation for smaller businesses, although certain schemes have introduced lower entry requirements for MSMEs.
- Delay in incentive disbursement: In some cases, incentives have been delayed due to lengthy verification processes, impacting cash flow planning for businesses.
- Complex compliance requirements: Annual claims require detailed documentation and certifications, which can be resource-intensive for companies without dedicated compliance teams.
- Dependence on global supply chains: Many sectors still rely on imported components or materials, exposing businesses to global disruptions and price volatility.
- Uneven sector performance: While sectors such as mobile manufacturing have exceeded expectations, others have seen slower progress due to market conditions or execution challenges.
- Limited domestic value addition: In certain industries, especially electronics, manufacturing is still focused on assembly rather than deep value addition, limiting the broader economic impact.
Funding and financial solutions to achieve PLI targets
Key financial requirements under PLI and how businesses can address them:
- Capital expenditure needs: Companies must invest in plant, machinery, and infrastructure before receiving incentives. Financing options such as Bajaj Finserv Business Loans can support these upfront investments.
- Technology upgrade costs: Advanced manufacturing often requires specialised equipment and technology, which may need structured financing solutions aligned with business cash flows.
- Working capital during expansion: Scaling production requires additional funds for raw materials, labour, and operations before revenue is realised. Working capital financing helps bridge this gap.
- Bridge financing for incentives: Since incentives are disbursed after verification, short-term funding can help maintain liquidity during the waiting period.
- Supply chain financing for MSMEs: Smaller suppliers supporting large manufacturers need access to capital to fulfil orders. Financing solutions such as invoice discounting and supply chain funding can enable smoother operations across the ecosystem.
Impact of the PLI scheme on MSMEs and small businesses
How MSMEs benefit from the PLI Scheme through direct and indirect channels:
- Direct participation opportunities: Around 176 MSMEs have directly benefited from PLI as of 2026. Sectors with relatively lower investment requirements, such as bulk drugs, medical devices, drones, and food processing, allow mid-sized manufacturers to participate. The drone segment, in particular, has enabled smaller startups to qualify and grow under the scheme.
- Supply chain integration: Large PLI beneficiaries create extensive supplier networks, opening opportunities for MSMEs. For instance, global manufacturers rely on hundreds of component suppliers, many of which are small and medium enterprises. This multiplier effect significantly increases employment and business opportunities across the ecosystem.
- Quality and technology upgrades: MSMEs supplying to large manufacturers are required to meet global quality standards. This drives improvements in processes, certifications, and production efficiency, making them more competitive not just domestically but also in international markets.
- Strong inclusion in food processing: The food processing segment has seen the highest MSME participation. Smaller processing units with moderate investment levels can benefit, and the scheme also supports farmer-producer organisations and agri-based enterprises.
- Future expansion for MSMEs: Policy direction indicates that future versions of the scheme will include lower entry thresholds and broader participation for MSMEs, especially in sectors such as electronics components, defence manufacturing, and sustainable materials.
Conclusion
The PLI Scheme marks one of India’s most significant industrial policy moves in recent decades, highlighting the importance of collaboration between the government and private sector to build global manufacturing strength. With production exceeding Rs. 7.5 lakh crore, investments of Rs. 3.2 lakh crore, and over 11.5 lakh direct jobs created, the scheme has already demonstrated strong results.
The next phase will focus on deeper MSME participation, stronger supply chain development, and sector-specific refinements. These efforts will play a crucial role in determining whether India can achieve its long-term manufacturing and export ambitions by 2030.
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