Production Linked Incentive (PLI) Scheme

The Production Linked Incentive scheme is an industrial policy initiative that offers financial subsidies to eligible manufacturers based on a fixed percentage of incremental sales from goods produced in targeted domestic units.

Under Indian Economy

• It seeks to enhance domestic manufacturing capacity and export competitiveness by directly addressing structural cost disadvantages faced by Indian producers.
• It facilitates integration into global value chains by attracting foreign direct investment and incentivizing supply chain localization across sunrise sectors.
• It advances strategic self-reliance by systematically reducing import dependencies in critical technology, pharmaceutical, and capital goods sectors.

UPSC tests the scheme in GS Paper 3 under industrial policy and economic growth, frequently requiring candidates to compare its performance-linked framework with legacy input-subsidy regimes. Questions focus on evaluating structural implementation hurdles, such as actual value addition depth, disbursement bottlenecks, and persistent raw material import reliance. Examiners also assess its broader impact on job creation, capital formation, and alignment with India's international trade commitments.

• Liberalization GS3
• Government policies and interventions GS2