DGFT & Policy
How the PLI Scheme Is Transforming India's Export Landscape
How PLI is reshaping electronics, pharma, textiles, auto, and solar exports. Supply chain opportunities even for non-PLI participants.
By Aaryan Kakani · · 12 min read
Key takeaways
Between 2020 and 2026, India rolled out the largest industrial incentive programme in its history. The Production Linked Incentive (PLI) scheme, spread across 14 sectors with a combined outlay of approximately Rs 1.97 lakh crore (roughly USD 24 billion), pays manufacturers a percentage of their incremental sales over a base year. The idea is straightforward: make it financially attractive to manufacture in India rather than import, and in doing so, build export-grade capacity at scale.
The results are starting to show. India's electronics exports have crossed USD 29 billion, mobile phone exports alone have risen from under USD 3 billion in FY20 to over USD 15.6 billion in FY25, and the country is now the world's second largest mobile phone exporter. Pharmaceutical companies are investing in bulk drug capacity to reduce API dependence on China. Specialty steel mills are adding value-added product lines they previously did not find viable.
For Indian exporters (whether you are a direct PLI beneficiary, a component supplier, or a merchant exporter) the scheme is reshaping the landscape of what India makes and sells to the world. This article breaks down the impact sector by sector and identifies where the export opportunities are.
What the PLI Scheme Actually Is
At its core, PLI is a cash incentive paid to manufacturers based on their incremental sales above a defined base year. If a company sells Rs 100 crore worth of goods in the base year and Rs 140 crore in the incentive year, the PLI payment is calculated on the Rs 40 crore increment. Incentive rates vary by sector (typically between 4% and 6% of incremental sales) and are available for five to six years.
The scheme was launched in three phases. The first phase in March 2020 covered mobile phones, APIs/bulk drugs, and medical devices. The second and third phases, announced in November 2020 and later, expanded to cover electronics, automobiles and auto components, pharmaceuticals, telecom and networking products, textiles, food processing, solar PV modules, advanced chemistry cells (ACC batteries), specialty steel, white goods (ACs and LEDs), and drones.
| Sector | Outlay (Rs Crore) | Incentive Range | Tenure |
|---|---|---|---|
| Large-scale electronics (mobile phones) | 40,951 | 4% - 6% | 5 years |
| IT hardware (laptops, tablets, servers) | 17,000 | 1% - 4% | 6 years |
| Bulk drugs / APIs | 6,940 | 5% - 20% | 6 years |
| Medical devices | 3,420 | 5% | 5 years |
| Automobiles & auto components | 25,938 | Up to 18% | 5 years |
| ACC batteries | 18,100 | Per-kWh incentive | 5 years |
| Textiles (MMF & technical) | 10,683 | Up to 15% | 5 years |
| Food processing | 10,900 | 4% - 10% | 6 years |
| Specialty steel | 6,322 | 4% - 12% | 5 years |
| Solar PV modules | 24,000 | Per-W incentive | 5 years |
| Telecom & networking | 12,195 | 4% - 7% | 5 years |
| White goods (AC & LED) | 6,238 | 4% - 6% | 5 years |
| Drones | 120 | 20% | 3 years |
| Pharmaceuticals | 15,000 | 3% - 10% | 6 years |
Electronics and Mobile Phones: India's Biggest PLI Success Story
The large-scale electronics manufacturing PLI, with an outlay of Rs 40,951 crore, is the most visible success of the entire programme. India's mobile phone exports have gone from USD 2.8 billion in FY20 to over USD 15.6 billion in FY25 , making the country the world's second-largest mobile phone exporter after China. Apple now assembles a significant share of its global iPhone production in India through its partners Foxconn, Pegatron, and Tata Electronics. Samsung has massively expanded its Noida plant. Dixon Technologies has emerged as a major contract manufacturer.
The downstream impact on components is what matters most for the broader export ecosystem. PLI manufacturers need printed circuit board assemblies, camera modules, display assemblies, battery packs, chargers, and packaging materials. Much of this was fully imported three years ago. Today, a growing share is being sourced domestically, creating a component supply chain that did not exist before.
The IT hardware PLI (Rs 17,000 crore) extends this to laptops, tablets, all-in-one PCs, and servers. Companies like Dell, HP, Lenovo, and Dixon have committed investments to manufacture these products in India. While laptop exports are still in their early stages, the trajectory mirrors what mobile phones achieved three years earlier.
Pharmaceuticals: Reducing China Dependence, Expanding API Exports
India has two separate PLI schemes for pharmaceuticals. The first, with an outlay of Rs 6,940 crore, targets bulk drugs and active pharmaceutical ingredients (APIs). Specifically the 53 critical APIs and key starting materials (KSMs) where India was more than 80% dependent on Chinese imports. The second, with Rs 15,000 crore, covers formulations, biopharmaceuticals, complex generics, patented drugs, and cell/gene therapy products.
India has historically been the "pharmacy of the world" in formulations but has been critically vulnerable on the raw material side. The bulk drug PLI has led to investments in fermentation-based APIs (like Penicillin G and Erythromycin Thiocyanate), chemical synthesis APIs, and KSMs such as Para Amino Phenol and 7-ACA. Companies including Laurus Labs, Shilpa Medicare, Aurobindo Pharma, and Aarti Drugs have committed capacity additions under the scheme.
The medical devices PLI (Rs 3,420 crore) complements this effort, targeting products like CT scanners, MRI machines, dialysis machines, cardiac stents, and orthopaedic implants that India almost entirely imports today. While these are longer-cycle investments, the first production lines are starting to come online.
Textiles: MMF, Technical Textiles, and the Garment Value Chain
The textile PLI, with an outlay of Rs 10,683 crore, is strategically focused on man-made fibre (MMF) apparel, MMF fabrics, and technical textiles . This is a deliberate pivot. India has traditionally been strong in cotton textiles but weak in synthetics, which account for roughly 70% of global textile trade. Bangladesh, Vietnam, and China dominate synthetic garment exports. The PLI aims to close that gap.
The incentive structure is designed to reward scale. Companies investing at least Rs 300 crore in plant and machinery for MMF products get incentives of up to 15% of incremental turnover for the first year, tapering down over five years. A second tier covers investments of Rs 100 crore and above for technical textiles and MMF segments, with incentives up to 11%.
For exporters, the signal is clear: India is building serious capacity in polyester, nylon, and viscose fabrics and garments. Technical textiles (geotextiles, agrotextiles, medical textiles, and protective clothing) are an emerging export category where India has had almost no presence. PLI investments in this space are creating export-ready capacity for products like surgical gowns, industrial filters, and automotive interiors.
Auto Components, EVs, and the ACC Battery Play
The automobile and auto component PLI, with an outlay of Rs 25,938 crore, is among the largest by allocation. It covers advanced automotive technology components. Things like automatic transmissions, electronic power steering, advanced driver assistance systems, EV components (motors, controllers, on-board chargers), and lightweight materials (aluminium castings, carbon-fibre composites).
What makes this sector interesting for exporters is the global shift to electric vehicles. India is not trying to become the next EV car exporter overnight. But it is positioning itself as a competitive source for EV components. Auto component exports from India already stood at USD 20.7 billion in FY24. PLI is pushing this toward higher-value products that command better margins.
The ACC battery PLI (Rs 18,100 crore) is a separate but connected initiative. It aims to establish 50 GWh of advanced chemistry cell manufacturing capacity in India. Companies like Ola Electric, Reliance New Energy, Amara Raja, and Exide have won PLI allocations. As domestic cell manufacturing comes online, it feeds into not just EVs but also grid storage, telecom towers, and consumer electronics. All potential export categories.
Food Processing: From Farm Gate to Export Shelf
The food processing PLI, with an outlay of Rs 10,900 crore, is creating a new class of export-oriented food manufacturers in India. The scheme is divided into three categories: large entities (with at least Rs 10,000 crore sales in processed food), SMEs (fruit and vegetable processing, marine, and millet-based products), and branding and marketing support for "Brand India" food exports.
What makes this PLI different is that food processing has a direct link to agricultural exports. India's second-largest export category after petroleum. The scheme has attracted investments from companies like ITC, Nestle India, Britannia, Parle, Haldiram's, and Desai Brothers. These companies are setting up or expanding facilities specifically to process Indian agricultural produce (mangoes, cashews, spices, marine products, and millets) into export-ready packaged goods.
The Mega Food Parks scheme complements PLI by providing industrial infrastructure (cold chains, warehousing, QC labs, and logistics hubs) near farming clusters. This is particularly relevant for perishable exports where the supply chain has historically been the bottleneck, not demand.
Specialty Steel: Moving Up the Value Chain
India is the world's second-largest crude steel producer, but the country has been a net importer of specialty steel. The high-grade alloys used in automotive, defence, aerospace, electrical equipment, and infrastructure. The specialty steel PLI, with an outlay of Rs 6,322 crore, targets five product categories: coated and plated steel, high-strength and wear-resistant steel, specialty rails, alloy steel and steel wires, and electrical steel (CRGO).
India imports approximately Rs 30,000 crore worth of specialty steel annually. The PLI scheme has attracted 67 companies with committed investments of Rs 42,500 crore, targeting additional production capacity of 26 million tonnes over five years. The incentive ranges from 4% to 12% of incremental sales, depending on the product category.
For exporters, this means India is becoming competitive in value-added steel products that command significantly higher prices than commodity-grade flat or long products. Electrical steel (CRGO) used in transformers and motors, high-strength automotive steel for body panels and structural components, and corrosion-resistant coated steel for construction are all categories where Indian mills are now investing in capacity that did not exist three years ago.
Solar PV: From Module Assembly to Cell Manufacturing
The solar PV PLI, with the largest single-sector outlay of Rs 24,000 crore, is India's most ambitious import- substitution play. India currently imports more than 80% of its solar cells and modules from China. The scheme incentivises both solar cell manufacturing and module manufacturing , with higher incentives for companies that integrate backward from modules to cells to wafers and ingots.
The incentive is structured on a per-watt basis, with higher payouts for more locally integrated manufacturing. A company that makes modules from imported cells gets a lower incentive than one that manufactures both cells and modules. This is deliberately designed to build a complete solar value chain in India rather than just the last assembly step.
Companies like Adani Solar, Tata Power Solar, Reliance, Vikram Solar, and Waaree Energies have committed to building integrated cell and module manufacturing capacity. While the primary demand driver is India's domestic solar installation target (500 GW by 2030), excess capacity is expected to be export-oriented, particularly to markets in Africa, the Middle East, and Southeast Asia that want an alternative to Chinese supply.
How Exporters Can Benefit Without Direct PLI Participation
You do not need to be a PLI beneficiary to profit from the scheme. The real multiplier effect of PLI is in the supply chain . Every PLI manufacturer needs domestically sourced inputs. And they are actively looking for them, because higher domestic value addition improves their own PLI incentive calculations and helps them meet rules-of-origin thresholds for FTA-based exports.
Opportunities for non-PLI exporters
- Become a vendor to PLI companies. Apple, Samsung, and Dixon actively onboard domestic component suppliers. The same applies to PLI auto, pharma, and electronics companies. Register on the MII (Make in India) vendor portal and approach PLI companies directly with your product catalogue.
- Supply raw materials and intermediates. Specialty chemicals for pharma APIs, copper and aluminium for electronics, high-grade cotton and synthetic fibres for textiles, packaging materials for food processing. The upstream opportunity is enormous.
- Leverage the "Made in India" brand effect. As India becomes known for manufacturing iPhones and specialty steel, the credibility halo extends to related product categories. Buyers who previously would not consider an Indian source for precision components are now open to it.
- Export the same HS codes from non-PLI capacity. PLI is creating global buyer awareness for Indian products in categories where India was not a factor before. A merchant exporter can ride this wave without being a PLI beneficiary. The import demand exists regardless of who manufactured the goods.
- Tap into PLI-driven industrial infrastructure. PLI investments come with supporting infrastructure. Testing labs, common effluent treatment plants, logistics parks, and bonded warehousing. Non-PLI exporters in the same geography can use these facilities to improve their own export compliance and cost structure.
HS Codes Impacted by PLI-Driven Export Growth
For exporters looking to identify where PLI-driven production is creating new or expanded export volumes, the following HS code clusters are the ones to monitor. These are the tariff headings where India's export share is growing (or is expected to grow) as a direct result of PLI-backed manufacturing capacity coming online.
| PLI Sector | Key HS Codes | Products |
|---|---|---|
| Electronics | 8517, 8471, 8534 | Mobile phones, laptops, tablets, PCBs |
| Pharma | 2933 - 2942, 9018 | APIs, bulk drug intermediates, medical devices |
| Textiles | 5402 - 5407, 5903 | MMF yarns, synthetic fabrics, technical textiles |
| Auto / EVs | 8507, 8703 - 8711 | Li-ion batteries, EV components, auto parts |
| Food processing | 2005 - 2008, 1905 | Processed fruits/vegetables, baked goods, millet products |
| Specialty steel | 7219 - 7227 | Alloy steel, coated steel, electrical steel (CRGO) |
| Solar PV | 8541, 8501 | Photovoltaic cells, solar modules, inverters |
| Telecom | 8517, 8529 | Routers, switches, telecom networking equipment |
| White goods | 8415, 9405 | Air conditioners, LED lighting components |
| ACC batteries | 8507 | Advanced chemistry cells, battery packs |
The Bigger Picture: PLI and India's Export Trajectory
PLI is not a silver bullet. It does not solve India's logistics costs, its complex labour laws, or its land acquisition challenges overnight. But it has done something important: it has made it financially viable for companies (both Indian and multinational) to commit large-scale manufacturing investments in India, in sectors where the country was a net importer just five years ago.
For exporters, the takeaway is practical. The product mix of India's exports is changing. Categories like mobile phones, specialty steel, solar modules, and processed food (which were negligible five years ago) are becoming meaningful export lines. The HS codes are shifting. The buyer base is expanding. And the supply chain opportunities are real, even for companies that are not direct PLI beneficiaries.
The exporters who will benefit most are those who understand which PLI sectors align with their product capabilities, monitor the HS codes where new capacity is coming online, and position themselves as suppliers, vendors, or export partners to PLI-backed manufacturers. The incentive structure is temporary. But the manufacturing capacity being built is permanent.
Frequently Asked Questions
What is the PLI scheme and how much has the Indian government allocated for it?
The PLI scheme is a government initiative that pays manufacturers a percentage of their incremental sales over a base year. The total allocation across 14 sectors is approximately Rs 1.97 lakh crore (around USD 24 billion). Incentive rates vary by sector, typically between 4% and 6% of incremental sales, available for five to six years.
Can exporters benefit from the PLI scheme even if they are not direct PLI beneficiaries?
Yes. PLI manufacturers need domestic suppliers for raw materials, components, and intermediate goods. Exporters can become vendors to PLI companies, supply domestically produced inputs, leverage improved industrial infrastructure, and ride the global buyer awareness that PLI-backed "Made in India" production is creating. The scheme is opening HS codes where India had minimal export presence before.
Which HS codes are most impacted by PLI-driven export growth?
Key HS codes include 8517 (mobile phones), 8471 (laptops), 2933-2942 (pharma APIs), 5402-5407 (MMF yarns and fabrics), 8507 (lithium-ion batteries), 7219-7227 (specialty steel), 8541 (photovoltaic cells), and 2005-2008 (processed food). Monitor these on the DGFT trade statistics portal for emerging volume and value trends.
Update history
- First published.