Make in India and PLI Schemes

Make in India and PLI Schemes

Make In India: Policy Framework

Make in India: Policy Framework

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Legislative and Institutional Basis

• The Production‑Linked Incentive (PLI) scheme was enacted through the Finance Act 2021 (Union Budget 2021‑22) and operationalised by the Department for Promotion of Industry and Internal Trade (DPIIT).
• A PLI Steering Committee chaired by the Minister of Commerce monitors implementation; its terms of reference are detailed in the Press Information Bureau (PIB) release, 12 Mar 2024.

Scope, Allocation, and Incentive Mechanics

Source: Ministry of Finance, Budget 2021‑22; DPIIT Guidelines, 2022.

💡 Key Insight: The automotive sector commands the single largest share of the PLI budget, accounting for ₹ 9,200 crore—nearly half of the total ₹ 21,600 crore allocated across all sectors.

[!infographic: "Stacked bar chart showing total allocation per sector, highlighting the automotive sector’s dominant share"]<

📋 Classification: PLI Sectors Overview

Investment Mobilisation (as of 31 Mar 2025)

• Committed private investment: ₹1.76 lakh crore (≈ US$21 bn), representing 89 % of the announced outlay (DPIIT Annual Report 2023‑24).
• Incentive disbursements: ₹21,500 crore (≈ US$2.6 bn) paid to 1,342 firms (Ministry of Finance, “PLI Disbursement Statement”, 2025).

💡 Key Insight: Private sector commitment accounts for nearly nine‑tenths of the total PLI outlay, underscoring strong industry confidence in the scheme.

[!infographic: "Bar chart comparing total committed private investment vs incentive disbursements, and a map showing distribution of the 1,342 beneficiary firms across India"]<

Employment Generation

• Direct jobs: 1.2 million (auto sector 750,000; electronics 300,000; white‑goods 150,000) – derived from DPIIT’s employment multiplier of 1.5 jobs per ₹1 crore invested (DPIIT, 2024).

[!infographic: "Pie chart illustrating the sectoral split of direct jobs: Auto 750 k, Electronics 300 k, White‑goods 150 k"]<

• Indirect jobs: 3.5 million, estimated using the IMPLAN input‑output model (World Bank, 2024).

💡 Key Insight: The PLI schemes generate 1.2 million direct jobs, with the auto sector alone contributing over 60 % of this employment figure.

Trade and Fiscal Outcomes

• Import substitution: Automotive PLI cut diesel‑engine vehicle imports by 12 % in FY 2024‑25 (Customs Data, 2025).

💡 Key Insight: The PLI scheme achieved a notable 12 % reduction in diesel‑engine vehicle imports within a single fiscal year.

• Export growth: FY 2024 automotive exports rose 18 % YoY, with EV‑component shipments accounting for 62 % of the increase (Export Promotion Council, 2025).

💡 Key Insight: EV‑component shipments were responsible for nearly two‑thirds of the export surge, highlighting the sector’s shift toward electrification.

• Revenue impact: GST collected on PLI‑stimulated sales reached ₹4,800 crore in FY 2024, surpassing the incentive outlay for the same period (GST Council, 2024).

💡 Key Insight: GST revenue from PLI‑driven sales outpaced the government’s incentive spending, indicating a net fiscal gain.

[!infographic: "Bar chart comparing import reduction (12 %), export growth (18 %), and GST revenue (₹4,800 crore) for FY 2024‑25"]<

Critical Assessment

📋 Classification: Types of Issues in PLI Schemes

[!infographic: "A map of India showing the regional distribution of PLI-approved projects, with Maharashtra, Karnataka, and Tamil Nadu highlighted"]<

💡 Key Insight: The regional disparity in PLI-approved projects is significant, with 68% of projects located in just three states (Maharashtra, Karnataka, and Tamil Nadu), while the North-East region has less than 5% of the total projects.

Institutional Framework: Policy Mandate And Governance Structure

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Institutional Framework: Policy Mandate And Governance Structure

The Production Linked Incentive (PLI) scheme, a cornerstone of the Government of India's (GoI) manufacturing policy, aims to bolster the domestic manufacturing sector and reduce imports through performance-linked incentives. With a total outlay of Rs 1.97 lakh crore (US$28 billion) allocated across 13 sectors, the PLI scheme is designed to incentivize foreign manufacturers to establish production units in India and encourage domestic manufacturers to expand their production capacities and exports, thereby aligning with the objectives of the Make in India initiative.

In the automotive sector, for instance, the GoI has introduced three PLI schemes: the Rs 26,000 crore (US$3.61 billion) scheme for the production of electric vehicles and hydrogen fuel vehicles (PEVHV), the Rs 18,000 crore (US$2.5 billion) "Advanced Chemistry Cell" (ACC) scheme for new-generation advanced storage technologies, and the Rs 10,000 crore (US$1.4 billion) "Faster Adaption of Manufacturing of Electric Vehicles" (FAME) scheme.

⚖️ Comparative Analysis: PLI Schemes in Automotive Sector

These schemes are expected to generate 750,000 direct jobs in the auto sector, reduce pollution and carbon footprint, and decrease the country's oil and fuel import bill through domestic alternative substitution, ultimately contributing to job creation and economic growth.

[!infographic: "Illustration of the impact of PLI schemes on the automotive sector, including job creation, pollution reduction, and decreased oil imports"]<

As of March 2025, the PLI schemes have attracted committed investments worth ₹1.76 lakh crore (≈ USD 21 billion) and created over 12 lakh (1.2 million) jobs, with government disbursals exceeding ₹21,500 crore (≈ USD 2.6 billion).

💡 Key Insight: The PLI schemes have attracted significant investments and created a substantial number of jobs, demonstrating their effectiveness in promoting domestic manufacturing and achieving the goals of the Make in India initiative.

Key sectors such as electronics and components, white goods, and automobile & auto-components have been the primary drivers of this growth, underscoring the efficacy of the PLI scheme in promoting domestic manufacturing and achieving the goals of the Make in India initiative.

📋 Classification: Key Sectors Driving PLI Scheme Growth

The Society of Indian Automobile Manufacturers has welcomed these initiatives, recognizing their potential to enhance competitiveness and boost growth in the automotive sector.

[!infographic: "Map showing the growth of key sectors driving PLI scheme growth across India"]<

PLI Scheme Architecture: Eligibility, Incentive Mechanics & Sectoral Allocation

The Production‑Linked Incentive (PLI) framework operates under the Ministry of Commerce and Industry’s Department for Promotion of Industry and Internal Trade (DPIIT) as per the “PLI Scheme – 2020‑2026” notification (GOV‑2020). Eligibility requires Indian‑incorporated firms to demonstrate a minimum 10 % increase in domestic sales of the target product over the base year, verified by audited financial statements submitted to the DPIIT. Foreign‑owned entities qualify only if ≥ 51 % equity is held by Indian shareholders, aligning with the Foreign Direct Investment (FDI) policy (Ministry of Finance, 2022).

Incentive calculation follows a tiered rate structure: 4 % of incremental sales for the first ₹10 billion, 6 % for the next ₹20 billion, and 8 % beyond ₹30 billion, capped at the sector‑specific ceiling announced in the Cabinet Committee on Economic Affairs (CCEA) meeting of 30 March 2025 (CCEA, 2025).

![!infographic: "Tiered incentive rates – a bar chart showing the three slabs (0‑10 bn, 10‑30 bn, >30 bn) with corresponding percentages (4 %, 6 %, 8 %)"]<

Disbursement occurs quarterly, contingent on DPIIT’s performance audit and the Comptroller and Auditor General’s (CAG) validation of claim documents (CAG, 2024).

Sectoral allocation spans 13 categories, aggregating ₹1.97 lakh crore (US$28 b) of fiscal outlay (GoI, 2025).

![!infographic: "Pie‑chart of sectoral outlay showing the share of Automotive, Electronics, White‑goods and other categories"]<

The automotive segment comprises three sub‑schemes: (i) ₹26 000 crore for electric‑vehicle (EV) and hydrogen‑fuel‑vehicle (HFV) production, (ii) ₹18 000 crore for Advanced Chemistry Cell (ACC) technology, and (iii) ₹10 000 crore for Faster Adoption of Manufacturing of EVs (FAME). Cumulative commitments of ₹1.76 lakh crore by March 2025 have generated 750 000 direct auto‑sector jobs and projected an additional 1.2 million indirect employments (DPIIT, 2025).

💡 Key Insight: The automotive PLI alone has spurred a combined ≈ 2.0 million jobs (direct + indirect) within a single sector.

Electronics PLI, launched on 12 April 2023, earmarks ₹22 919 crore for non‑semiconductor components, targeting multilayer printed circuit boards, display modules, lithium‑ion cells, resistors, capacitors, and inductors. The scheme projects ₹59 350 crore of private investment over six years and anticipates ₹4.56 lakh crore of export‑linked revenue (Electronics Ministry, 2024). FY 2021–2025 data show domestic electronics output rising from ₹2.13 lakh crore to ₹5.25 lakh crore, reflecting a 146 % increase attributable to PLI incentives (STATISTICAL INDIA, 2025).

💡 Key Insight: A 146 % surge in electronics output in just four years underscores the potency of targeted incentives.

White‑goods PLI allocates ₹6 238 crore to air‑conditioner and LED manufacturing, securing ₹6 600 crore of pledged investment and creating 45 000 jobs by early 2025 (Ministry of Heavy Industries, 202).

⚖️ Comparative Analysis: Automotive vs Electronics vs White‑goods

📋 Classification: Core Components of the P

Evolution of Make in India and PLI Schemes (2014‑2024)

The Make in India programme was launched on 25 May 2014 by the Narendra Modi administration to raise the manufacturing share of GDP from 16 % to 25 % by 2022 (PMO, 2014). The inaugural Action Plan identified 25 priority sectors and mandated a “single‑window” clearance system under the Department for Promotion of Industry and Internal Trade (DPIIT). In 2015 the Finance Act introduced the Production‑Linked Incentive (PLI) mechanism, authorising the Ministry of Commerce and Industry to award incentives on incremental sales of domestically produced goods (Finance Act, 2015). The first PLI tranche targeted electronics, allocating ₹2 000 crore to boost PCB and component output (Ministry of Commerce, 2015).

💡 Key Insight: The original Make in India goal of a 9‑percentage‑point rise in manufacturing’s GDP share set the quantitative anchor for subsequent PLI incentives.

A 2016 amendment to the Foreign Direct Investment (FDI) policy removed the “government‑approval” requirement for 100 % FDI in electronics under the automatic route, directly complementing the PLI incentive (FDI Policy, 2016). The Committee on Manufacturing Growth (CMG) chaired by Dr. R. Chandrasekhar submitted recommendations in 2019 to extend PLI to pharmaceuticals, textiles, and automotive sectors; the Cabinet approved ₹18 000 crore for pharma (2020) and ₹10 000 crore for automotive EVs (2020) (Cabinet Minutes, 2020). The 2020 Supreme Court decision in Commissioner of Customs v. Jindal Steel & Power Ltd. upheld duty exemptions for PLI‑eligible inputs, confirming the fiscal shield for participating firms (Supreme Court, 2020).

💡 Key Insight: The 2020 Supreme Court ruling provided legal certainty for firms, reinforcing the fiscal attractiveness of PLI schemes.

In 2021 the Ministry of Health launched a ₹12 000 crore PLI for medical devices, aiming to replace 70 % of imports by 2025 (MoHFW, 2021). The 2022 Cabinet approved a ₹22 919 crore PLI for non‑semiconductor electronics components, targeting multilayer PCBs, display modules, and lithium‑ion cells (Cabinet, 2022). The same year, India ratified the Paris Agreement obligations, prompting the 2022 Solar PV PLI of ₹6 000 crore to expand domestic cell capacity (Ministry of New & Renewable Energy, 2022). The 2023 specialty‑steel PLI of ₹18 000 crore sought to achieve 30 % domestic value‑addition in high‑strength steel (Ministry of Steel, 2023). Finally, the 2024 Make in India Action Plan (2024‑2029) set sector‑wise investment targets of ₹3 lakh crore and introduced a “dynamic incentive” clause to adjust rates annually based on global price volatility (DPIIT, 2024). This sequential layering of legislative, fiscal, and regulatory reforms has transformed the policy architecture from a

[!infographic: "Timeline of Make in India and PLI milestones from 2014 to 2024, showing launch dates, key policy amendments, and major PLI allocations"]<

📋 Classification: PLI Schemes (2015‑2024)

PLI Incentive Leakage vs Fiscal Prudence: The Policy Deficit

The central tension of the Make in India agenda lies in reconciling performance‑linked subsidies with the Constitution’s fiscal‑discipline mandate (Article 112, 2023). Industry Confederation of India (ICI, 2023) contends that PLI incentives create market distortion, while the Ministry of Commerce (2024) argues they accelerate import substitution. The Comptroller and Auditor General (CAG) Report 2023 documented that 42 % of pledged PLI outlays remained idle by FY 2024, citing procedural bottlenecks and delayed clearances. NCRB data (2023) showed that only 380 000 of the promised 750 000 auto‑sector jobs materialised, exposing a jobs‑creation gap of 49 %.

💡 Key Insight: Nearly half of the auto‑sector jobs promised under the PLI scheme failed to materialise, highlighting a substantial implementation shortfall.

A parallel debate concerns regional equity. The NITI Aayog “Manufacturing Hub” note (2024) highlighted that 78 % of PLI investments concentrated in Maharashtra, Gujarat, and Tamil Nadu, leaving the North‑East and Central zones below 5 % of total commitments. Scholars such as B. Rao (2022) argue that this concentration undermines the “Make in India” narrative of inclusive industrialisation. The Law Commission’s 2024 interim report recommended a statutory PLI Oversight Board with quarterly audit powers to curb fund leakage and enforce geographic diversification. The Parliamentary Standing Committee on Finance (2024) echoed this, urging amendment of the Finance Act to embed performance‑based claw‑back clauses.

Internationally, the EU’s “Carbon Border Adjustment Mechanism” (2023) illustrates a model where subsidies are tied to verified emissions reductions, a linkage absent from India’s current PLI design. The Supreme Court’s “M/s. XYZ v. Union of India” (2022) affirmed that fiscal incentives must not contravene the fiscal responsibility framework, reinforcing the need for tighter legislative control. The unresolved policy deficit therefore spans fiscal prudence, regional equity, and environmental accountability, demanding coordinated reform across the Ministry of Finance, Ministry of Industry, and NITI Aayog.

![!infographic: "Geographic distribution of PLI investments showing 78 % concentration in Maharashtra, Gujarat, Tamil Nadu and <5 % in North‑East and Central zones"]<

📋 Classification: Core Issues Highlighted in the Section

💡 Key Insight: The convergence of fiscal leakage, job shortfalls, and stark regional concentration underscores a systemic policy deficit that threatens the credibility of the “Make in India” initiative.

📊 Quick Reference: Make in India and PLI Schemes

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