The Production Linked Incentive (PLI) Scheme is a government initiative, or scheme, launched by the Government of India to boost domestic manufacturing and attract large investments in key sectors. The scheme was first introduced in April 2020 for the Large Scale Electronics Manufacturing sector, specifically mobile phones, and was later expanded to cover 14 strategic sectors with a combined approved outlay of approximately ₹1.97 lakh crore. The scheme's origin is rooted in the government's push for Atmanirbhar Bharat (Self-Reliant India) and was created to solve the problem of low domestic value addition, high import dependence, and a lack of scale in Indian manufacturing.
The core mechanism of the PLI Scheme is to provide performance-linked incentives to companies. It works by offering financial incentives, typically ranging from 4% to 6%, calculated on the incremental sales of goods manufactured in domestic units over a specified base year. To qualify, companies must commit to minimum investment thresholds and the incentive window usually spans five to six years. The scheme is administered by the Department for Promotion of Industry and Internal Trade (DPIIT), which coordinates with the respective Administrative Ministries/Departments responsible for each sector. The PLI Scheme is closely connected to the broader Make in India initiative, as it rewards actual output and sales rather than just promised investments, aiming to integrate India more deeply into global supply chains. While the scheme has seen success in sectors like electronics, with mobile phone exports increasing significantly, the government has recently been examining revisions and a potential PLI 2.0 to focus on high-performing sectors and make the policies more effective.