Performance-linked incentives mark a shift from input subsidies to outcome-based industrial policy. Critically evaluate the PLI scheme's record in achieving import substitution and export competitiveness.

The Production Linked Incentive (PLI) scheme was launched in 2020 under Atmanirbhar Bharat. It pays firms only after they meet set investment and incremental-sales targets, and it covers 14 sectors with an approved outlay of ₹1.91 lakh crore [1]. It has a strong record on scale and on replacing imports of finished goods. Whether it has deepened value addition is still unproven.

Outcome-based design: merits

• NITI Aayog justified PLI as a way to beat the "barrier of scale" in Indian manufacturing [2].
• Fiscal prudence: ₹36,754 crore has been disbursed against ₹2.58 lakh crore invested by beneficiaries (June 2026) [1].

Import substitution: gains

• 99.2% of mobile phones used in India are now made domestically, and mobile imports fell nearly 77% [1].
• Telecom imports fell 18.5% a year over 2021–25 [1].
• Strategic sectors: the ACC battery, solar PV and bulk-drug schemes target critical import dependence [1].

Export competitiveness: gains

• Trade flip: India went from net importer of mobile phones in 2014 to net exporter [1].
• Electronics output rose 15.8% to ₹13.11 lakh crore in 2025-26 [1]. Global brands now treat India as a production base.

Limitations

• Assembly, not value addition: handset counts hide imported chips and displays. The six-year review gives no domestic value addition (DVA) data [1].
• Attribution: the investment figure counts everything beneficiaries spent, including what they would have invested anyway.
• Slow uptake: only about 19% of the outlay has been disbursed. Only 40 of 50 GWh of ACC capacity had been awarded by August 2025 [1].
• Narrow job data: the 14.57 lakh jobs are reported for only three sectors [1].
• WTO risk: China's DS642 dispute challenges the ACC and auto PLIs as import-substitution subsidies, and a panel was set up in February 2026 [3]. India lost a similar domestic-content case on solar (DS456) [4].

PLI has shown that outcome-linked support can build scale and reverse trade deficits in sectors like electronics. Replacing imports of finished goods, however, is not yet deep self-reliance. The next phase should publish DVA and job data for every sector. It should move unspent funds to components, as was done when PLISMBP was funded from PLISFPI savings [1]. It should also reward value created in India rather than the use of local inputs, so that it stays WTO-compliant [4]. This would turn "Assembled in India" into genuine Made in India and fulfil Atmanirbhar Bharat's goal.