The PLI Scheme at Five: Winners, Laggards and the Manufacturing Share That Still Won't Move

When the government launched the Production Linked Incentive scheme in 2020, initially for mobile phone manufacturing and pharmaceutical ingredients before expanding to fourteen sectors with a combined outlay exceeding 1.97 lakh crore rupees, the stated ambition went well beyond any single industry. The scheme was meant to be the instrument that finally lifted manufacturing's share of India's GDP, stuck around 15 to 17 percent for well over a decade despite repeated policy pushes going back to the National Manufacturing Policy of 2011 and the original Make in India campaign launched in 2014. Five years into PLI's rollout, the honest scorecard is neither the unambiguous success the government's messaging suggests nor the wasted subsidy some critics claim, but a genuinely mixed record that rewards sector-by-sector scrutiny rather than a single verdict.

Where PLI has clearly worked

Mobile phone manufacturing is the scheme's flagship success by almost any measure. India's mobile phone exports crossed 1.5 lakh crore rupees in recent fiscal years, up from a fraction of that before PLI, with Apple's assembly partners Foxconn and Pegatron scaling up Indian operations substantially and Apple itself stating that a meaningful share of iPhones sold globally are now assembled in India. This is a real, measurable shift in where global electronics assembly happens, and it reflects PLI doing what production-linked incentives are actually good at: providing a large enough financial nudge to tip a genuinely close locational decision by a multinational firm choosing between India, Vietnam and China amid a broader global supply chain diversification trend that PLI capitalised on rather than single-handedly created.

Bulk drug and pharmaceutical intermediate manufacturing under PLI has also shown genuine, if less dramatic, gains, reducing India's dependence on Chinese active pharmaceutical ingredient imports for a subset of critical drugs, a strategically significant achievement given the vulnerability exposed when Chinese API supply chains were disrupted during the pandemic's early months.

Where it has underperformed

Several other sectors covered under PLI have shown far weaker uptake. The scheme for advanced chemistry cell battery manufacturing, telecom equipment, and specialty steel have all seen either delayed disbursements, unmet production commitments by selected beneficiary firms, or outright withdrawal of some companies from their sanctioned allocations. Parliamentary committee reports and CAG-adjacent reviews have flagged that disbursement under PLI across several sectors has lagged well behind the pace initially projected, partly reflecting the genuine difficulty firms face in meeting incremental production and investment thresholds within the scheme's timelines, and partly reflecting bureaucratic friction in the verification and disbursal process itself.

The textile sector PLI, aimed at man-made fibre and technical textiles where India has historically underperformed relative to competitors like Bangladesh and Vietnam despite deep traditional strength in cotton textiles, has seen particularly weak participation, with several large textile firms citing the scheme's product category restrictions and minimum investment thresholds as poorly calibrated to how the industry actually operates, being dominated by many mid-sized players rather than the handful of large firms the scheme's design implicitly assumes.

The stubborn GDP share number

The most uncomfortable fact for PLI's boosters is that manufacturing's share of India's GDP has not meaningfully moved, hovering around 13 to 15 percent in recent National Accounts data, if anything lower than the level a decade ago when Make in India was launched with the explicit target of reaching 25 percent by 2022, a target quietly abandoned without much acknowledgment once it became clear it would not be met. This does not mean PLI has failed on its own terms; a scheme targeted at fourteen specific sectors was never going to single-handedly move an economy-wide aggregate that is also shaped by the relative growth rates of services, agriculture and construction, and by structural forces like the services sector's outsized productivity gains pulling investment and labour toward itself. But it does mean the government's own initial framing, which explicitly linked PLI to a manufacturing GDP share target, has quietly been abandoned in favour of narrower, sector-specific success stories that are real but considerably more modest than the original ambition.

The China-plus-one question

A fair assessment of PLI needs to grapple with how much of its apparent success reflects the scheme's own design versus a broader "China-plus-one" diversification trend among global manufacturers seeking to reduce concentration risk after pandemic-era supply chain disruptions and rising US-China trade tensions. Vietnam, Mexico and other emerging manufacturing hubs have captured meaningful shares of this diversification without anything resembling India's PLI outlay, suggesting that India's electronics assembly gains may reflect a combination of PLI incentives and this global tailwind, with the counterfactual of how much investment would have arrived anyway difficult to establish cleanly. This does not invalidate PLI, but it should temper claims that attribute the entire mobile manufacturing boom to the scheme alone.

What PLI reveals about India's deeper competitiveness gaps

The sectors where PLI has struggled most, textiles, specialty chemicals, advanced batteries, tend to be precisely those where India's underlying competitiveness gaps, in logistics costs, land acquisition friction, power tariff reliability and skilled workforce availability, are hardest to paper over with a production subsidy alone. A firm choosing where to build a battery gigafactory is weighing decades-long infrastructure and supply chain considerations that a five to seven year incentive scheme, however generously funded, cannot fully offset if the underlying logistics cost of moving goods within India remains, by World Bank Logistics Performance Index measures, higher than competing manufacturing destinations.

An honest verdict

PLI deserves credit as India's most serious and best-funded industrial policy experiment in a generation, and its electronics and pharmaceutical successes are real, not illusory. But five years in, it is increasingly clear the scheme works best as a targeted accelerant for sectors where India was already reasonably close to competitive, rather than as a tool capable of manufacturing competitiveness from scratch in sectors held back by deeper structural constraints. The government's own retreat from its original manufacturing GDP share ambitions, quiet as it has been, is itself the clearest acknowledgment of that limit. What comes next, whether a PLI 2.0 more narrowly targeted at proven winners or a harder look at the logistics and land reforms that no subsidy scheme can substitute for, will determine whether the scheme's genuine successes compound or plateau.