What Happened
- The government has disbursed Rs 28,748 crore under Production Linked Incentive (PLI) schemes across 14 sectors as of December 2025, as announced by the Ministry of Commerce and Industry.
- A total of 836 applications across the 14 sectors have been approved, involving cumulative investment of over Rs 2.16 lakh crore.
- These sectors have registered cumulative sales exceeding Rs 20.41 lakh crore and exports surpassing Rs 8.3 lakh crore.
- The PLI schemes have generated employment for more than 14.39 lakh people.
- In pharmaceuticals and medical devices, the PLI has enabled first-time domestic manufacturing of 191 bulk drugs, achieving import substitution worth approximately Rs 1,785 crore and increasing domestic value addition to 83.7%.
Static Topic Bridges
Production Linked Incentive (PLI) Scheme: Design and Rationale
The PLI scheme was announced in 2020-21 with a total outlay of Rs 1.97 lakh crore across 14 key sectors to incentivise domestic manufacturing and reduce import dependence. Unlike traditional subsidies that support inputs or capital expenditure, the PLI model provides incentives linked to incremental sales, ensuring that government support directly correlates with actual production outcomes.
- The 14 sectors include: large-scale electronics manufacturing, IT hardware, bulk drugs, medical devices, pharmaceuticals, telecom and networking products, food processing, white goods (ACs and LEDs), drones, specialty steel, textile products, automobiles and auto components, advanced chemistry cell batteries, and solar photovoltaic modules.
- Incentives are calculated as a percentage (typically 4-6%) of incremental sales over a base year, disbursed over 5-6 years.
- The scheme was designed to make Indian manufacturing globally competitive by achieving economies of scale.
- PLI is WTO-compliant as it does not discriminate between domestic and foreign-invested companies.
Connection to this news: The Rs 28,748 crore disbursement against the Rs 1.97 lakh crore outlay indicates that the scheme is in its active incentive phase, with disbursements expected to accelerate as more companies reach their incremental sales targets.
Import Substitution and Atmanirbhar Bharat
Import substitution involves replacing foreign-made goods with domestically produced alternatives, a strategy that India has pursued historically since independence and has revived under the Atmanirbhar Bharat (Self-Reliant India) framework announced in 2020. The modern approach differs from the pre-1991 import substitution model by combining protectionism with export competitiveness.
- The PLI scheme has enabled first-time domestic manufacturing of 191 bulk drugs in the pharmaceutical sector, reducing reliance on China for active pharmaceutical ingredients (APIs).
- Domestic value addition in pharma has risen to 83.7% from earlier levels.
- The telecom and networking products sector has seen sales increase more than six-fold over the base year of FY 2019-20.
- Telecom exports have reached Rs 21,033 crore, demonstrating the export orientation of the new industrial policy.
- India's electronics manufacturing output crossed $115 billion in FY 2024-25, with mobile phone production being a major success story.
Connection to this news: The disbursement data validates the Atmanirbhar Bharat approach of using targeted fiscal incentives to build domestic manufacturing capacity, particularly in strategic sectors like pharmaceuticals and telecom where import dependence had been a vulnerability.
Industrial Policy and Make in India 2.0
India's current industrial policy framework represents a shift from the pre-reform license-permit era to an incentive-based model that encourages both domestic and foreign investment in manufacturing. The PLI scheme is considered the centrepiece of "Make in India 2.0," targeting not just assembly operations but deep manufacturing with higher domestic value addition.
- India's manufacturing sector share in GDP has remained around 15-17%, below the government's target of 25%.
- The PLI scheme aims to make India a global manufacturing hub by addressing cost disadvantages through direct financial incentives.
- Global supply chain diversification (China Plus One strategy) has created an opportunity for India to attract manufacturing investment.
- The approved investment of Rs 2.16 lakh crore under PLI has exceeded the original outlay of Rs 1.97 lakh crore, indicating strong private sector confidence.
Connection to this news: The cumulative sales of Rs 20.41 lakh crore and exports of Rs 8.3 lakh crore demonstrate that PLI-backed manufacturing is increasingly plugging into global value chains rather than being limited to import substitution alone.
Key Facts & Data
- Total PLI outlay: Rs 1.97 lakh crore across 14 sectors.
- Disbursed till December 2025: Rs 28,748 crore.
- Approved applications: 836 across 14 sectors.
- Cumulative investment: over Rs 2.16 lakh crore.
- Cumulative sales: over Rs 20.41 lakh crore.
- Cumulative exports: over Rs 8.3 lakh crore.
- Employment generated: more than 14.39 lakh people.
- Pharma: 191 bulk drugs manufactured domestically for the first time; import substitution of Rs 1,785 crore.
- Telecom: sales increased six-fold over FY 2019-20 base; exports at Rs 21,033 crore.