India’s production-linked incentive programme is precise about how firms and sectors enter the system of public support. Each scheme lays down eligibility thresholds, investment requirements, production baselines, incentive rates, domestic value addition norms, testing requirements and timelines.
It is far less precise about how they leave.
That question is becoming urgent as the first cohort of PLI schemes is now reaching, or approaching, maturity. Electronics, pharmaceuticals, telecom and food processing have already run substantial portions of their incentive periods. The food processing PLI expires at the end of 2026-27.
What happens after the incentive period is no longer theoretical.
The issue is not whether PLI has produced activity, as it has. The issue is whether India has a published framework for judging when supported sectors are competitive enough to no longer require fiscal support.
Government Data
India’s PLI programme, launched in April 2020 under the Atmanirbhar Bharat vision, covers 14 sectors with an incentive outlay of ₹1.91 trillion. According to a government release issued on February 20, 2026, in all, 836 applications had been approved as of December 31, 2025. Cumulative investment exceeded ₹2.16 trillion. Cumulative production and sales exceeded ₹20.41 trillion. Exports exceeded ₹8.3 trillion. More than 1.44 million direct and indirect jobs had been generated. Incentive disbursals stood at ₹287.48 billion.
The same release records sector-level achievements.
Mobile phone imports have declined by nearly 77% since 2020-21, with over 99% of domestic demand now met through local production. In pharmaceuticals, first-time domestic manufacturing of 191 bulk drugs has been achieved, import substitution of around ₹17.85 billion has been recorded, and domestic value addition has reached 83.7%. In telecom, sales have increased more than sixfold over the 2019-20 base year, while exports have risen to ₹210.33 billion. In automobiles, reported sales of ₹328.79 billion in 2025-26 indicate momentum in advanced automotive technology manufacturing.
The food processing PLI presents a different profile.
According to a Ministry of Food Processing Industries release issued by PIB on April 7, 2026, a total of 128 companies have been approved, covering 274 units across 22 states. Against a committed investment of ₹77.22 billion, actual investment has reached ₹92.07 billion, meaning companies exceeded their initial commitments. Employment generated stands at 329,000 persons. PLI product sales grew at a CAGR of 10.58%, and export sales at a CAGR of 7.41%. Millet-based product sales rose from ₹3.46 billion in 2022-23 to ₹18.45 billion in 2024-25.
These metrics describe programme activity during the incentive period.
They do not address the question the PLI framework itself makes central: whether supported sectors will remain competitive once public support ends.
Performance Gap
The Advanced Chemistry Cell battery scheme is the starkest illustration.
The scheme was approved in May 2021 with a total outlay of ₹181 billion to establish 50 GWh of domestic ACC manufacturing capacity. Of the targeted 50 GWh, 40 GWh has been awarded to four beneficiary firms. As of December 31, 2025, cumulative investment stood at ₹32.37 billion and employment generated at 1,118.
Installed capacity across all four beneficiaries totalled 1 GWh, entirely by Ola Cell Technologies Private Limited against its 20 GWh award. ACC Energy Storage Private Limited, Reliance New Energy Battery Storage Limited and Reliance New Energy Battery Limited had each installed zero capacity. No beneficiary firm had claimed any incentive.
Against a target of 50 GWh over four years, 1 GWh had been installed. Against a targeted outlay of ₹181 billion, no disbursement took place.
The government has noted that the scheme has acted as a catalyst for other manufacturers outside the scheme to announce 178 GWh of capacity over the next five years. That may be a valuable spillover. But it does not answer whether the scheme’s own awarded beneficiaries are on track to build the competitiveness the scheme was designed to create.
Specialty steel offers another warning as fourteen of 58 approved projects withdrew from the first round of the specialty steel PLI scheme because of business plan changes and execution delays. That is a withdrawal rate of about 24%. The Ministry of Steel has estimated incentive disbursals of only ₹20 billion by the end of the scheme tenure, well below the sanctioned outlay.
The second round has drawn fresh commitments of ₹252 billion from 35 companies. The government describes this as evidence of continued industry confidence. It may be. But it is also a reminder that headline commitments and realised competitiveness are different things.
The government’s own December 2025 monitoring acknowledged this differentiation. It stated that pharmaceuticals, large-scale electronics, medical devices and select textiles segments had demonstrated clear gains in domestic value addition and export competitiveness, while other sectors were at different stages of implementation and scaling up.
That distinction should now produce differentiated exit criteria.
Extensions and Evidence
The automotive PLI shows why this matters.
The scheme, approved by the Union Cabinet on September 15, 2021, with a budgetary outlay of ₹259.38 billion, covers advanced automotive technology products. Its performance period now runs from 2023-24 to 2027-28. The scheme was originally designed for 2022-23 to 2026-27, but was extended by one year after a stakeholder review. The Ministry also accepted industry requests for quarterly subsidy disbursement and expanded the number of domestic value addition testing agencies from two to four.
For performance year 2023-24, ₹3.22 billion was disbursed to four applicants. For 2024-25, ₹20 billion was disbursed to five applicants. The scheme has catalysed proposed investment of ₹676.9 billion against the original target of ₹425 billion. Against the proposed employment of 148,000, a total of 28,515 jobs had been generated as of December 2023.
The investment numbers are encouraging. But the extension decision raises a governance question.
No published document records a formal finding that the sector required additional time to reach competitiveness. No public assessment sets out the cost to the exchequer of the extension year. Nor is there a published comparison of whether continued incentive disbursement was more appropriate than alternative instruments.
The scheme will expire at the end of 2027-28. Whether the advanced automotive technology sector will be internationally competitive after that date, without further support, is not a question the extension decision formally answers.
New Missions
The same issue is visible beyond the formal PLI framework, in India’s broader industrial policy architecture.
The India Semiconductor Mission, approved by the Union Cabinet on December 15, 2021, with an outlay of ₹760 billion, offers fiscal support of 50% of project cost for silicon fabs, compound semiconductor facilities, assembly and test units, and chip design. As of December 2025, 10 projects had been approved across six states, with total investment of ₹1.6 trillion. Commercial production at Micron Technology’s assembly, testing, marking and packaging facility in Sanand, Gujarat, was inaugurated on February 28, 2026. The Tata Electronics-PSMC fab in Dholera, Gujarat, with a ₹910 billion investment, remains the flagship project.
ISM 2.0, announced in Union Budget 2026-27, expands the focus to semiconductor equipment manufacturing, full-stack chip design IP and supply-chain resilience. The government has projected that by 2029, India could acquire the capability to design and manufacture chips required for nearly 70-75% of domestic applications. The longer-term roadmap extends to 3-nanometre and 2-nanometre technology nodes by 2035.
This is a strategic sector, and long gestation periods are inevitable. Semiconductor fabs cannot be assessed on the same timeline as assembly-heavy manufacturing. And that is precisely why the exit framework should be designed early.
The central government provides fiscal support of 50% of project cost, and several states offer additional capital assistance, bringing total public support to 60-75% of capex in some cases. One proposed ISMC joint venture in Karnataka, involving US$3 billion in investment, did not materialise. Yet no public assessment explains why that project failed. Nor has the mission published a cost-per-wafer or cost-per-chip benchmark at which Indian-manufactured semiconductors can be considered internationally competitive without public subsidy.
Expansion is being announced before the first cycle has produced a published competitiveness assessment.
Green hydrogen faces a similar challenge from the other side: supply has been awarded, but demand is still being built.
The National Green Hydrogen Mission, launched in January 2023 with an outlay of ₹197.44 billion, targets 5 million metric tonnes per annum of green hydrogen production capacity by 2030, alongside 125 GW of associated renewable energy capacity. Under the SIGHT production incentive mechanism, 19 companies hold cumulative annual production allocations of 862,000 tonnes. Fifteen firms hold awards for 3,000 MW of annual electrolyser manufacturing capacity, with total incentives of ₹44.4 billion. Three ports — Deendayal Port Authority in Gujarat, V.O. Chidambaranar Port Authority in Tamil Nadu and Paradip Port Authority in Odisha — have been designated green hydrogen hubs.
Scheduled commercial dates for awarded tranches begin from August 2026 and March 2027. But the mission portal does not yet publish completion confirmations against those timelines. Allocated production capacity of 862,000 tonnes per annum signals investor interest. It does not confirm realised output.
The demand-side record is also still developing. SECI tender data shows price discovery for 724,000 metric tonnes per annum of green ammonia supply to 13 fertiliser units. That is a useful demand anchor. It is not a competitiveness benchmark. It does not tell policymakers the production cost per kilogram below which commercial demand becomes self-sustaining without continuing subsidy.
PLI Monitoring
The PLI programme already has a monitoring structure. Implementing ministries and departments conduct periodic reviews, which are consolidated at the Empowered Group of Secretaries level. The standard metrics are approved applications, realised investment, production and sales, exports, employment and incentive disbursals.
These metrics are necessary because they establish whether firms are investing, producing, and claiming incentives during the support period. They also help verify that public money is being disbursed in accordance with eligible output.
But they do not establish whether competitiveness has been achieved.
A competitiveness assessment would ask different questions. Is the cost per unit of PLI-supported production falling relative to equivalent Chinese or Vietnamese production? Is the export share of total output rising after the incentive period, not merely during it? Is domestic value addition deepening across the value chain, or concentrated in final assembly? Is import dependence for upstream inputs declining? Are firms maintaining output and market share after incentives taper?
These questions are not reflected in the standard PLI monitoring template. The current framework is designed to confirm that production occurred and that incentive claims are valid. It is not designed to determine when public support has achieved its purpose.
Exit Framework Musts
India’s industrial policy now needs the same precision at the exit stage that it already applies at the entry stage.
At minimum, such a framework should include three elements.
First, each scheme should publish a competitiveness threshold before it reaches maturity. For pharmaceuticals, this could involve a sustained export surplus over a defined period without incentive disbursement, combined with a domestic value addition floor. For electronics, it could combine a domestic value addition threshold with export market share above a defined baseline. For green hydrogen, the relevant threshold would be the production cost per kilogram at which commercial demand becomes self-sustaining.
These benchmarks should not be negotiated after targets are missed or after the incentive period has expired. They should be part of scheme design.
Second, extensions should follow a formal protocol. Any extension should require a published finding that the gap between realised and targeted competitiveness is temporary and attributable to specific, addressable constraints. It should include a cost-to-exchequer estimate for the extension period. It should also explain why continued incentive disbursement is preferable to alternatives such as infrastructure support, standards policy, procurement reform, tariff calibration, R&D support or targeted credit.
PLI 2.0 reform discussions have already pointed toward tighter links between incentives, export performance and domestic value addition. That direction is correct. It should be formalised into the extension decision process.
Third, the framework must differentiate by sector type. Assembly-intensive sectors with short production cycles cannot be assessed on the same schedule as semiconductor fabs or green hydrogen infrastructure. A fab may require years between groundbreaking and competitive commercial yield. A green hydrogen facility depends on demand-side infrastructure and offtake arrangements that the production incentive alone does not control.
This does not mean long-gestation sectors should receive indefinite support. It means their exit criteria should be designed around realistic sectoral timelines, not adjusted ad hoc after deadlines are missed.
Industrial Policy
India has the institutional machinery to build such a framework. DPIIT publishes PLI data. The Empowered Group of Secretaries conducts cross-sector reviews. MeitY, MNRE, the Ministry of Heavy Industries and the Department of Pharmaceuticals already collect much of the sector-level cost, export, import and value-addition data that a competitiveness assessment would require.
The missing element is not information. It is a stated framework for using that information to decide when support has achieved its stated purpose.
Industrial policy cannot be evaluated only by how many firms enter a scheme, how much they invest during the incentive period, or how much production they report while support is available. Those are important indicators, but they are not the final test.
The final test is whether supported sectors can compete after support is withdrawn.
Entry criteria were designed before the first PLI application was received. Exit criteria deserve the same quality of advance design. Otherwise, India risks turning temporary industrial support into a series of extensions justified after the fact, rather than a disciplined instrument for building competitiveness.
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