"The PLI scheme has boosted output, but its success rests on domestic value addition." Critically examine this in light of NITI Aayog's 2026 impact assessment.

The Production Linked Incentive (PLI) scheme pays firms only for additional production above a base year. NITI Aayog prepared its 2026 impact assessment with IIM Ahmedabad. The report finds nearly 70% of targeted segments across 14 sectors on track. It also says lasting success depends on raising domestic value addition (DVA) and building stronger supply chains [1]. The statement is largely valid, but it needs some qualification.

Output has clearly risen

• By March 2026: investment of over ₹2.40 lakh crore, exports of about ₹15.2 lakh crore and over 14.15 lakh jobs [2].
• Private capital leads: PLI-Auto drew ₹44,326 crore of investment, above its ₹42,500 crore target, while paying only about ₹2,386 crore in incentives [3].
• Mobile phones under the LSEM scheme received ₹19,091 crore of a ₹34,139 crore outlay, which shows real production scale [4].

Why DVA is the real test

• Measurement gap: DVA is not one of the report's four parameters (investment, production, exports, jobs) [1]. A plant that mostly assembles imported parts can still be marked "On-Track".
• Low value addition: DVA in mobile phones rose only from about 15% to about 23% [4]. White goods aim to raise DVA from 20–25% to 75–80% by 2028–29 [5].
• Few jobs for the capital: PLI-Auto created only 67,820 jobs [3]. Capital-heavy assembly creates few jobs without local suppliers.
• Opacity: in segments marked "Data unavailable", there is no way to tell whether public money worked [1].

Where the statement is incomplete

• Pay-for-performance protects the treasury: IT Hardware PLI 2.0 has paid out less than 1% of its ₹16,939 crore outlay [4]. Segments that fail cost the government little.
• Assembly is often the first step: high assembly volumes create demand for local parts. The scheme now also covers specified electronic components [1].
• Frontier sectors such as ACC batteries and drones show gradual capacity creation, so short-term figures understate their impact [1].
• Success also depends on deeper MSME participation and harmonised data systems [1].

PLI has worked well at attracting investment and scale, but it has not yet delivered deep manufacturing. In the next round, DVA should become a scored fifth parameter. Frontier sectors should get their own timelines. Large firms should be rewarded for sourcing from MSMEs, and all ministries should report in a common data format. This shift from volume to depth would make Atmanirbhar Bharat and integration into Global Value Chains (GVCs) last, in line with SDG 9 (industry, innovation and infrastructure).