The Production Linked Incentive (PLI) Scheme is a scheme introduced by the Government of India, launched in April 2020, initially for the Large Scale Electronics Manufacturing sector. It was created as a strategic reform initiative aligned with the Atmanirbhar Bharat campaign to boost domestic manufacturing, attract large-scale investment, reduce import dependence, and enhance India's global competitiveness. The scheme aims to solve the problem of higher manufacturing costs in India compared to global peers, often referred to as "disability" costs.
The core mechanism of the PLI Scheme is an output-oriented subsidy, providing financial incentives to eligible companies. Companies receive incentives, typically ranging from 4% to 6%, calculated on the incremental sales of manufactured goods over a specified base year, which is often FY 2019-20. This support is generally provided for a period of five to six years. The scheme is performance-linked, meaning incentives are tied strictly to actual production and sales, not promised investments.
The PLI Scheme is a central component of the Make in India initiative and has been expanded to cover 14 strategic sectors with a total incentive outlay of ₹1.91 lakh crore. The Department for Promotion of Industry and Internal Trade (DPIIT) acts as the central nodal authority overseeing the scheme. Recently, the scheme has seen amendments and the introduction of successor frameworks, such as the PLI 2.0 Scheme for IT Hardware and the Electronics Component Manufacturing Scheme (ECMS). These changes indicate a strategic transition towards encouraging deeper domestic value addition and component manufacturing, moving beyond mere assembly.