India Ends $23 Billion Manufacturing Incentive Program Without Expansion

Government Decides Against Extending Production-Linked Incentive (PLI) Scheme

The Indian government has decided to let the $23 billion Production-Linked Incentive (PLI) scheme lapse without expansion, according to government officials cited in a Reuters report. This decision comes just four years after the initiative was introduced to boost domestic manufacturing and attract companies away from China.

No Extensions Despite Industry Requests

The PLI scheme, which covered 14 pilot sectors, will not be expanded, and production deadlines will not be extended despite requests from some participating firms, officials confirmed. Major companies such as Apple supplier Foxconn and Indian conglomerate Reliance Industries were among the 750 firms that signed up for the program, according to public records.

Limited Incentive Payouts and Missed Targets

As of October 2024, firms under the scheme had produced goods worth approximately $151.93 billion, achieving only 37% of the initial target set by the government. However, India had issued just $1.73 billion in incentives, which is less than 8% of the allocated funds, according to a commerce ministry document.

Mobile Phones and Pharmaceuticals Show Growth

Despite the lower-than-expected incentive disbursements, the government has defended the scheme’s success, particularly in pharmaceuticals and mobile phone manufacturing, which have seen significant growth. Between April and October 2024, 94% of the nearly $620 million in incentives were distributed to these two industries.

Government Plans New Policy for Faster Investment Recovery

While the PLI scheme will not continue beyond its initial framework, officials indicated that the government is considering a new initiative aimed at helping companies recover their investment costs more quickly. This potential policy shift could provide alternative support for manufacturers looking to expand in India.

India’s decision to conclude the PLI scheme without further expansion marks a shift in its manufacturing policy, signaling a focus on refining strategies to enhance domestic production efficiency.