NITI Aayog Launches Report on “Impact Assessment of PLI Schemes”

Syllabus: GS3/Economy

Context

• NITI Aayog released the report titled “Impact Assessment of PLI Schemes”, evaluating the performance of Production Linked Incentive (PLI) schemes across 14 sectors.

About Production Linked Incentive (PLI) Scheme

• The Production Linked Incentive (PLI) scheme is a government initiative launched in 2020. 
• The primary aim was strengthening India’s manufacturing capabilities by offering financial incentives to eligible companies based on their incremental sales.
• The scheme initially targeted three sectors, and over time, it has expanded to include 14 sectors.

Findings of the NITI Aayog Report

• Investment: PLI schemes attracted investments of ₹2.4 lakh crore, achieving 76% of the combined target.
• Production and Sales: Generated ₹22.66 lakh crore in cumulative production and sales, achieving 64% of the target.
• Employment: Generated employment for 8.49 lakh people by March 2026, achieving only 28% of the target of 30.18 lakh jobs.
• Implementation period: The schemes had completed 58% of their combined implementation period, with 42% remaining.
• Sectoral progress: Nearly 70% of the targeted segments were broadly on track.

Significance of PLI Schemes

• The domestic value addition under the White Goods PLI scheme grew from 20% to 55%, indicating greater localisation of components and knowledge transfer.
• The Medical Devices PLI scheme generated ₹14,945 crore in sales by March 2026, supporting domestic production of medical devices.
• Reducing import dependence: India’s local renewable energy production ecosystem has been strengthened by raising solar PV manufacturing capacity from roughly 8 GW to nearly 116 GW.
• Pharmaceutical self-reliance: The Bulk Drugs PLI scheme has aided in local production of critical starting materials, drug intermediates and active pharmaceutical ingredients (APIs).
• Developing emerging industries: The Drones PLI scheme has encouraged the growth of India’s domestic drone manufacturing ecosystem.

Challenges in PLI Implementation

• Employment creation has reached only 28% of the target, considerably lower than investment and production achievements.
  • High capital intensity and automation in several sectors limit employment generation relative to investment.
• High investment and turnover eligibility thresholds have restricted the participation of smaller enterprises, particularly in the textile sector.
• Higher production does not necessarily translate into deeper domestic manufacturing if critical components and raw materials continue to be imported.
• Outcomes vary across sectors due to differences in technology, market maturity and investment cycles.
• Investments in manufacturing facilities take time to translate into commercial production and employment, particularly in emerging technology sectors.

Way Ahead

• Create common data-reporting systems across implementing ministries and regularly monitor investment, production, exports and employment at the firm level.
• Encourage public procurement of domestically manufactured products, strengthen domestic markets and develop export opportunities.
• Improve access to finance, technology, infrastructure and quality certification. Rationalise eligibility conditions wherever necessary to facilitate greater MSME participation.

Source: PIB