The government’s ambitious Production-Linked Incentive (PLI) scheme, launched to boost domestic manufacturing, has achieved 64% of its cumulative production target, but only 18.5% of the allocated incentives have been disbursed so far.
An impact assessment report by NITI Aayog revealed that the government has disbursed Rs 35,350 crore under the PLI schemes covering 14 sectors, against a total outlay of Rs 1.91 lakh crore, even as 58% of the scheme’s implementation period has elapsed.
The report said the relatively modest share of cumulative disbursements was consistent with the performance-linked design of the scheme, under which incentives are released only after companies meet specified investment, production and other eligibility criteria, rather than being front-loaded.
“As participating firms expand capacity, scale up production and meet progressively higher performance thresholds, disbursements are expected to increase over the respective scheme tenures,” NITI Aayog CEO Anurag Jain told TNIE.
Another NITI Aayog official told TNIE that the relatively low disbursement was largely due to the scheme’s stringent performance-linked conditions, which leave little scope for misuse. “You achieve the targeted sales, and then only you will be able to claim incentives,” he said.
However, the report also noted that the relatively low incentive disbursement indicated that the scheme remained in an evolving phase and warranted continued monitoring.
The drones sector leads in incentive utilisation, at 77.5%, although the absolute disbursement stands at just Rs 93 crore against an allocation of Rs 120 crore. The mobile and electronics sector leads in absolute disbursement, with Rs 19,091 crore released, accounting for 55.8% of its allocated outlay. The pharmaceuticals sector follows, with 44.4% utilisation of its incentive allocation.
Meanwhile, according to the impact assessment report, the PLI scheme has covered 70% of the targeted sectors so far, achieving cumulative incremental production worth Rs 22.66 lakh crore, or 64% of the target of Rs 35.37 lakh crore.
The assessment further noted that the 14-sector scheme had helped generate exports worth Rs 15.2 lakh crore, attracted investments of around Rs 2.40 lakh crore and created 14.15 lakh direct and indirect jobs.
A total of 892 applications have been approved under the scheme so far.
The scheme’s performance was evaluated on four parameters — additional investment, additional production, export intensity and employment generation. The assessment adopted achievement of 50% of the respective targets as the benchmark for determining whether a sector was on track.
The NITI Aayog report noted that the initial phase of the scheme involved setting up greenfield projects, which typically have longer gestation periods. “Production is expected to gather pace as these facilities stabilise and companies expand their operations,” Jain told TNIE.
Among the sectors, large-scale electronics manufacturing, pharmaceuticals, telecom and networking products, drones, food products and bulk drugs have performed well. The bulk drugs scheme, in particular, has made progress towards its primary objective of reducing import dependence, although its export performance has been relatively weaker.
Around 60% of the scheme’s total outlay was directed towards sectors integrated into global value chains, reflecting the government’s emphasis on developing high-value manufacturing capabilities and positioning Indian companies as global players.
