The Production Linked Incentive (PLI) Scheme is a government scheme introduced in March 2020 to boost domestic manufacturing and attract large-scale investment in India. It was conceived as a cornerstone of the Atmanirbhar Bharat ('Self-Reliant India') Programme to make domestic manufacturing globally competitive and create domestic champions. The scheme's primary objective is to scale up domestic manufacturing capability, substitute higher imports, and create new jobs. The initial launch in March 2020 targeted three industries: Mobile and Allied Component manufacturing, Electrical Component manufacturing, and Medical Devices.
The mechanism of the PLI Scheme is a performance-linked incentive, offering financial rewards to eligible companies based on their incremental sales of goods manufactured in India. Incentives typically range from 4% to 6% on incremental sales over a defined Base Year of 2019-20 for a period of four to six years, though some sectors have higher rates. To be eligible, companies must commit to a minimum investment and meet threshold criteria, such as a minimum of ₹10 crores for MSMEs or ₹100 crores for others, with a maximum of ₹1,000 crores. The grant of incentives is directly linked to production capacity and incremental turnover, compelling investors to create large-scale manufacturing facilities.
The scheme has been significantly expanded from the initial three sectors to cover 14 key sectors with a total outlay of ₹1.97 lakh crore. These sectors include automobiles and auto components, electronics and IT hardware, pharmaceuticals, solar modules, and advanced chemistry cell batteries. The PLI Scheme is closely connected to the broader Make in India initiative and aims to integrate Indian manufacturers into global value chains. The scheme is implemented by respective nodal ministries, such as the Ministry of Electronics and IT or the Department of Pharmaceuticals, depending on the sector. While the core mechanism of linking incentives to incremental production has stayed the same, the scheme has seen recent changes, including an additional allocation of ₹19,500 crores towards PLI for solar PV modules in the Budget 2022-23 and the approval of a ₹22,919 crore scheme for non-semiconductor electronics components in March 2025.