The Production Linked Incentive (PLI) Scheme is a flagship industrial-policy instrument and a government scheme of India, not an act or a judgment. It was first announced for mobile-phone and electronics manufacturing in March 2020 and was formally notified by the Ministry of Electronics and Information Technology (MeitY) in April 2020. The scheme was created to boost domestic manufacturing, attract large investments, reduce import dependence, and position India as a global manufacturing hub, forming a central plank of the Atmanirbhar Bharat initiative and the broader "Make in India" framework.
The core mechanism of the PLI Scheme is that it offers financial incentives, typically ranging from 4 to 6 per cent of incremental sales, to eligible companies. This incentive is disbursed only against incremental sales of eligible products manufactured in India, measured over a fixed base year, such as 2019-20. Selected firms must commit to threshold investments and minimum incremental production targets over the scheme's tenure, which is usually five years. The scheme is administered by relevant nodal ministries, including the Department for Promotion of Industry and Internal Trade (DPIIT) and MeitY.
The scheme has been progressively extended since its launch; the Union Budget 2021-22 earmarked roughly ₹1.97 lakh crore across an expanding list of sectors. It has expanded from the initial three sectors to cover 14 strategic sectors, including pharmaceuticals, automobiles, and textiles. This expansion marked a paradigm shift from traditional input-based incentives to outcome-linked support, where incentives are strictly tied to performance, measured by incremental sales. Discussions around a potential PLI 2.0 suggest a future focus on rewarding domestic value addition rather than just volume-driven incentives.