Output-linked operational support is increasingly preferred over capital subsidies in India's industrial policy. Examine this with reference to the Container Manufacturing Promotion Scheme.

Indian industrial policy is moving from paying for factories built to paying for goods produced and sold. The Cabinet-approved Container Manufacturing Promotion Scheme (CMPS) has ₹10,000 crore up to FY 2039-40 and puts about 89% of it into output-linked support [1]. The shift is sound, but it carries its own risks.

Why capital subsidies are losing favour

• Weak capex outcomes: SPECS paid 25% of capital expenditure, yet investment was only ₹9,482 crore against an expected ₹20,000 crore [3].
• Fiscal discipline: a capital grant is spent even if the plant never becomes competitive. Under output-linked schemes, firms that miss sales thresholds cannot claim [3].

How CMPS reflects the shift

• Operational Expenditure Assistance (₹8,891 crore): paid on containers made to global standards and sold [1]. It targets the per-box cost gap with imports.
• Light capital layer: Interest Subvention Assistance (₹859 crore) gives a 3% subvention on term loans [1]. This matters because capital in India costs five to six percentage points more than international rates [3].
• Common facilities: ₹150 crore for shared testing such as dynamic longitudinal impact testing [1].
• Target: about 7.5 lakh TEUs a year, roughly ten times current capacity, with linkages to castings, steel and paints [1].

Limits of output-linked design

• Slow disbursal: only ₹28,748 crore of PLI's ₹1.91 lakh crore outlay had been paid by 31 Dec 2025, because claims begin only after production starts [2].
• All-or-nothing thresholds: IT hardware PLI 2.0 achieved about 20% of its investment target and 3% of its production target [3].
• Input bottlenecks: under the specialty-steel PLI, about ₹12,900 crore was invested against ₹21,000 crore committed [4]. Containers need CORTEN steel, and only four domestic makers had BIS certification in 2022 [5].
• Demand risk: the first follow-on order was 1,000 containers from Maersk [6]. That is small against the capacity target, and unsold boxes earn no support.

Output-linked support rewards results rather than promises, and CMPS pairs it sensibly with modest capital help. It will work better if payments are made in output slabs instead of cliff thresholds, year-wise disbursal is published, and domestic CORTEN supply is secured first. Built this way, CMPS can turn Atmanirbhar Bharat in maritime trade into a container export hub.