The Production Linked Incentive (PLI) Scheme is India's most ambitious industrial policy initiative, designed to attract global manufacturing investment by providing direct financial incentives to companies that manufacture in India. With a total outlay of ₹1.97 lakh crore (~$26 billion) across 14 sectors, the PLI scheme has fundamentally changed the calculus for foreign manufacturers considering India.
How the PLI Scheme Works
The PLI scheme provides financial incentives of 4-6% of incremental sales over a base year to eligible manufacturers for a period of 5 years. The key principles are:
- Companies must achieve minimum thresholds of incremental sales and investment
- Incentives are paid based on actual production/sales performance (not on investment alone)
- Both Indian and foreign companies (including their Indian subsidiaries) are eligible
- The scheme is designed to reward scale — higher production volumes earn higher incentives
14 Sectors Covered Under PLI
High-Priority Sectors
- Large-Scale Electronics (Mobile, IT): ₹40,951 crore — attracting Apple, Samsung, Foxconn
- Automobiles & Auto Components: ₹25,938 crore — focused on EV and advanced components
- Advanced Chemistry Cell (ACC) Battery: ₹18,100 crore — enabling India's EV battery ecosystem
- Semiconductor & Display: ₹76,000 crore — Micron, Tower Semiconductor investments
Manufacturing & Materials
- Specialty Steel: ₹6,322 crore — high-grade steel for automotive and defense
- White Goods (AC, LED): ₹6,238 crore — component manufacturing localization
- Textiles: ₹10,683 crore — man-made fibers and technical textiles
- High-Efficiency Solar PV Modules: ₹24,000 crore — clean energy manufacturing
Pharma & Healthcare
- Pharmaceuticals: ₹15,000 crore — APIs and key drug intermediates
- Medical Devices: ₹3,420 crore — reducing import dependence
Other Sectors
- Food Processing: ₹10,900 crore — organic products, ready-to-eat, marine products
- Telecom & Networking: ₹12,195 crore — 5G equipment manufacturing
- IT Hardware: ₹17,000 crore — laptops, tablets, servers
- Drones: ₹120 crore — drone and drone component manufacturing
Eligibility for Foreign Companies
Foreign manufacturers can access PLI benefits through:
- Indian Subsidiary: Set up a wholly-owned subsidiary in India and apply directly
- Joint Venture: Partner with an Indian company to qualify
- Contract Manufacturing: Work with Indian contract manufacturers who are PLI-approved
Key eligibility criteria typically include:
- Minimum cumulative investment threshold (varies by sector)
- Minimum incremental sales targets over the base year
- Manufacturing must occur within India
- Products must meet domestic value-addition norms
Additional Incentives Stack
PLI benefits stack on top of India's broader incentive ecosystem:
- 15% Corporate Tax: For new manufacturing companies incorporated after October 2019
- SEZ Benefits: Tax holidays and duty exemptions in Special Economic Zones
- State-Level Incentives: Additional capital subsidies, land allotments, and power tariff concessions
- Customs Duty Relief: Import duty exemptions on capital goods and raw materials for export-oriented units
How to Apply for PLI Benefits
The application process is sector-specific, but generally involves:
- Registering on the relevant ministry portal
- Submitting investment and production plans
- Meeting eligibility criteria within the specified timeline
- Annual performance reporting and verification
- Incentive disbursement based on verified incremental sales
SaeSpartner assists foreign companies with the entire PLI application process — from eligibility assessment and documentation to ongoing compliance support.