The Production Linked Incentive (PLI) Scheme is a flagship industrial-policy instrument, classified as a government scheme, introduced by the Government of India to boost domestic manufacturing and attract large investments. It was first announced in March 2020 and notified in April 2020 for mobile-phone and electronics manufacturing, as part of the broader Atmanirbhar Bharat (self-reliant India) initiative. The scheme was created to solve the problem of India's limited technological infrastructure, fragmented supply chain, and heavy import dependence, which reduced the global competitiveness of Indian manufacturing. The core objectives are to increase domestic manufacturing output, reduce import dependence, and improve the global competitiveness of Indian manufacturers.
The mechanism rests on the principle of rewarding incremental performance: incentives are disbursed only against incremental sales of eligible products manufactured in India, measured over a fixed base year. Companies must commit to a predetermined minimum incremental investment in plant, machinery, and equipment, which varies by sector. The financial incentive, typically ranging from 4 to 6 per cent of incremental sales, is credited to the firm after an independent agency verifies the annual performance against the targets. The scheme connects directly to the Make in India framework and is administered by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry, along with concerned line ministries like the Ministry of Electronics and Information Technology (MeitY).
Initially launched for three industries, the scheme was progressively extended through the Union Budget 2021-22 to cover 14 strategic sectors with a total approved outlay of approximately ₹1.97 lakh crore. Recently, the scheme has seen amendments, such as in the PLI Scheme for Textiles, where the minimum investment threshold was reduced from ₹300 crore to ₹150 crore for Part-1 category applicants, effective August 1, 2025. Furthermore, the incremental turnover criteria for incentives in the textile sector was reduced from 25% to 10% starting FY 2025–26, to lower entry barriers and accelerate growth.