The Indian government has tasked the country’s top management institute, the Indian Institute of Management, Ahmedabad (IIM-A), to find out why its flagship scheme to promote domestic manufacturing in various sectors has not delivered as expected, and suggest remedial measures.
According to two government officials aware of the development, the study—to be conducted under the aegis of federal think tank NITI Aayog—will examine 14 production-linked incentive (PLI) schemes that have attracted around ₹2.16 trillion in investments since they were launched during the covid-19 pandemic in 2020.
PLI schemes offer companies incentives linked to incremental domestic production, rewarding them for increasing output over a base year, rather than providing upfront subsidies.
Despite a large outlay, the schemes have seen limited traction—of the nearly ₹1.91 trillion allocated for incentives, only about ₹28,748 crore or 15% had been disbursed by December 2025, according to a 20 February commerce ministry statement.
“The study will undertake a comprehensive evaluation of the effectiveness of the scheme and focus on their impact on production growth, export expansion, job creation, and their role in enhancing India’s position in global supply chains,” the first official cited above said, requesting anonymity, adding that the study will also help understand whether the schemes need expansion or restructuring.
Early indicators already point to uneven performance across sectors.
Jaijit Bhattacharya, president of the Centre for Domestic Economy Policy (CDEP) Research, said that industries such as mobile phone manufacturing and food processing have done relatively well, largely because they require lower investments and are easier to scale. In contrast, capital-intensive and technology-heavy sectors like batteries and solar photovoltaic (PV) modules have struggled due to high costs, slower capacity creation, and continued dependence on imports.
“The goal of PLI schemes was to increase local manufacturing capacity and deepen domestic supply chains. Many of these schemes had strict entry requirements for applicant companies to prevent fly-by-night operators from claiming incentives,” Bhattacharya said.
He added that the schemes also needed to be supported by trade safeguards such as anti-dumping duties.
“This is because the moment India starts setting up new manufacturing, Chinese manufacturers reduce their prices in what is called predatory pricing, with an intent to shut down the Indian manufacturing. The Chinese manufacturers are backed by government subsidies for exports,” Bhattacharya said.
Queries emailed to the spokespersons of NITI Aayog, IIM Ahmedabad, and the ministries of electronics & information technology (MeitY), heavy industries, commerce & industry, steel, textiles, food processing industries, new & renewable energy, and civil aviation remained unanswered till press time.
Queries to the Department of Telecommunications and the Department of Pharmaceuticals also did not elicit any response.
Winners vs losers
Data from individual sectors shows a stark divergence in outcomes.
The PLI scheme for electric vehicle batteries—or advanced chemistry cells (ACC)—was the worst performer, with zero disbursals from the ₹18,100-crore fund created in 2021. This happened because Indian battery makers faced technology challenges in scaling up production, according to a written response submitted in Parliament on 10 February by the ministry of heavy industries.
A Rajya Sabha parliamentary committee on industry called upon the ministry to provide a one-time extension for beneficiaries to start production and reallocate incentives if necessary.
The heavy industries ministry’s other PLI scheme, a ₹25,938-crore package for clean mobility (PLI-Auto), was also a poor performer, recording disbursals of just ₹2,337 crore as on 27 March.
Just four companies—Tata Motors, Mahindra & Mahindra, Ola Electric, and Toyota Kirloskar Auto Parts—claimed incentives worth ₹332 crore under the PLI-Auto scheme in FY25, its first year of disbursal.
In the second year, this rose to 10 manufacturers with a disbursal of about ₹2,090 crore, with the new beneficiaries being Bajaj Auto, TVS Motor, Delphi-TVS Technologies, Sona BLW Precision Forgings, Bosch Automotive Electronics India, and Tata Autocomp Systems.
The Rajya Sabha committee mentioned earlier had, on 11 March, raised concerns about the downward revisions of budget allocations for the PLI-Auto scheme and said repeated underutilization of funds should be avoided.
The strongest performance has been in electronics, especially mobile phone manufacturing. The government on 27 March in Rajya Sabha said in a written response that it has disbursed incentives worth ₹15,554 crore so far under the scheme. The outlay for the sector was ₹40,951 crore.
Another success story was the PLI scheme for food processing industries (PLISFPI), which saw disbursements of ₹2,714.79 crore till 27 March, compared to an outlay of ₹10,900 crore. The scheme, which is to be implemented from 2021-22 to 2026-27, has seen cumulative investments of about ₹9,207 crore by approved applicants till 31 December 2025.
Under the PLISFPI, the government provides financial incentives to promote Indian food brands abroad, supporting branding and marketing activities for Indian-branded consumer food products in global markets.