The production-linked incentives scheme, a new government tally shows, is more patient than it looks. Disbursements as on June 30, 2026 stood at ₹367.54 billion, about 18.7% of the Rs 1.97 trillion announced, in the seventh year of a programme meant to run for five.

At the same time, the phone scheme closed on March 31, 2026, and in July the Cabinet cleared a ₹625 billion successor. A second round has begun even before the first has finished paying. That makes this a good moment to ask what the scheme has bought. 

The Case For PLI
The electronics numbers are real. As of March 2026, the large-scale electronics scheme had drawn more than ₹206 billion in investment, with production above ₹11.62 trillion and exports above ₹6.53 trillion. The scheme has also paid out the most. Electronics has received ₹190.91 billion, followed by pharmaceuticals at ₹66.62 billion, food products at ₹32.71 billion, and autos at ₹31.74 billion. India now exports smartphones at a scale few expected a decade ago.

Pharmaceuticals show a quieter gain. A related government statement says a scheme for higher-value drugs has drawn Rs 467.44 billion in actual investment, well above its ₹172.75 billion target, and supported 121,294 jobs. In bulk drugs, 39 projects making 28 ingredients had been commissioned, with ₹52.10 billion invested. That matters because India has long relied on imported APIs, mostly from China.

Where The Promise Falls Short
The shortfalls are just as clear. The first is jobs. The schemes created 1.46 million direct and indirect jobs by June 2026, against the 6 million projected in the 2022 Budget speech.

The second is local value. Domestic value addition in electronics is put at 18–23% depending on who is counting, against the 35–40% expected by FY26. This is the old worry about assembly work. A phone put together from imported parts counts as production and earns the incentive, yet adds little at home. Because the subsidy is paid per unit sold, and rules limit how tightly it can be tied to local content, exports alone cannot show success. The better test is net exports after imported inputs, plus the profits and royalties foreign firms send home.

The third is uneven reach. Phones, pharmaceuticals and food processing together account for 79% of payouts. Deeper industries lag. The ₹181 billion battery scheme aimed at 50 GWh of capacity, but only 1.4 GWh had been built by October 2025, and the ₹240 billion solar scheme had paid nothing because no project had completed a year of production. In August, battery makers were given until 2031 to finish their plants.

The PLI scheme was announced for 14 sectors, from mobile phones, pharmaceuticals and autos to textiles, specialty steel, solar modules, advanced batteries and drones. Six years on, the money has gone mainly to a handful of them. Two schemes, advanced chemistry cell batteries and solar modules, have received nothing so far, and several others have drawn only a sliver of their outlay. Specialty steel has received ₹2.36 billion of ₹63.22 billion, and white goods ₹5.93 billion of ₹62.38 billion. The laggards matter more than their small payouts suggest. Batteries are central to electric vehicles and energy storage, and solar modules to the energy transition, both areas where India relies heavily on imports, mainly from China. Specialty steel feeds defence, power equipment and automobiles, and drones have strategic value, though their outlay is only ₹1.20 billion.

The Cost, And What it Bought
The direct cost so far is the ₹367.54 billion actually paid. That is not the whole bill. Fully used, the outlay is ₹1.97 trillion, and the tax revenue given up through related concessions is rarely counted alongside it. The fairer question is what each rupee has bought in jobs and local value. On jobs, the answer so far is less than planned. On capacity, some sectors have delivered and others are still building.

The low payout ratio is also not simply a saving. A company that builds a plant but misses a yearly sales or investment test in most schemes loses that year's payment for good. Unspent money is partly money firms could not claim, and partly capacity built on a promise that now runs below plan. 

What About Foreign Investment?
The headline figures look healthy. FDI equity inflows were about $58.8 billion in FY26, up from $50 billion the year before. One secondary source puts FDI into manufacturing at $19.04 billion in FY25, up 18%. Electronics is a small part of that. Cumulative FDI into electronics manufacturing since 2000 is roughly $4.9 billion. 

It would be wrong to credit PLI for the rise in FDI. Inflows are shaped by global supply-chain shifts, trade deals, and the services and technology sectors that still draw much of the money. No official figure separates FDI that came because of PLI. The scheme is one attraction among several, and probably a strong one in phones. Much of the PLI investment is also domestic.

Does It Need To Change?
The record points to redesign, not abandonment, and four changes stand out. 

First, the government should pay for the factory as well as the sales, since the first round lost most of its money in the gap between finishing a plant and selling enough from it, a problem the new components scheme partly addresses.

Second, the payment window should match the product: five years suits phone assembly but not a battery plant or a steel grade that customers take years to approve, and spending and sales tests need not fall in the same year.

Third, schemes that missed their targets should stop being reopened, because textile terms were halved and then relaxed again and the IT hardware outlay was more than doubled, and while each change has a reason, together they tell firms that targets can be negotiated.

Fourth, the government should publish more, reporting jobs created, local value added and cost per rupee of incentive for each scheme so that Parliament and the public can judge.

Still, the incentive cannot fix everything. Costly logistics, tariffs on imported inputs, slow approvals and thin skills are the very problems PLI was meant to offset, and money spent on them might lift manufacturing more broadly than subsidies to selected firms. Paying training providers when their graduates get and keep good jobs is one idea worth testing.

PLI is neither the triumph that official statements suggest, nor the waste that critics fear. India assembles phones at scale, makes medicines and ingredients it once imported, and has solar capacity it lacked in 2020. But the results are smaller than advertised, they are concentrated in a few sectors, and the jobs and local-value goals are still far off. 

Part of the reason is that manufacturing, especially capital-heavy manufacturing, creates fewer jobs per rupee of subsidy than the scheme's designers hoped. Services, which make up over half of the economy and already attract much of the foreign investment, deserve a place in the next round.

Incentives tied to hiring, skilling and exports in areas such as health care, tourism, logistics, design and digital services could create more jobs from the same capital, with less waiting for plants to be built. The case is not free of difficulty: services are harder to measure against a base year, and the best performers already grow without help, so any such scheme would need tight rules and honest reporting.

As the second round begins, the test is whether the design learns from the first, and whether the next version looks at where jobs can be created at the lowest cost, not only at where factories can be built.

*Views are personal.