On 10 November 2026 the Department of Pharmaceuticals announced that the Production Linked Incentive Scheme for Medical Devices (PLI-MD) has been extended up to 2035-36, with fresh applications invited and about ₹2,700 crore of outlay still to be used. The scheme, launched in 2020-21, has so far led to the domestic manufacture of over 60 high-end devices and components, from X-ray tubes and CT scanners to cardiac implants, and to production worth over ₹16,000 crore. The new round drops the minimum sales threshold and trims the minimum investment, lessons learnt from the first phase.
Behind this one release is the policy that has shaped Indian manufacturing since 2020. PLI is a standing question for CDS: UPSC has asked about Make in India and Atmanirbhar Bharat in CDS papers of 2019, 2020 and 2024, and PLI ties together industry, trade and the budget.
From Licences and Tariffs to Cash for Output
By Hitendra Deswal · Economics faculty, The Cavalier
To see what is new about PLI, start with what came before. In the first seven Five Year Plans, India followed import substitution: protect home industry from foreign goods with tariffs (a tax on imports) and quotas (a cap on quantity), and require government licences to start or expand a factory. The idea was that protected industry would "learn to compete in the course of time". It built a diverse industrial base, but it also built firms that sold into a captive market, with little pressure to improve quality or to export. After the 1991 reforms licences went and tariffs fell, but manufacturing's share of GDP stayed stuck. Our industry and services page gives the sector shares.
Three later steps led to PLI. Make in India was launched on 25 September 2014 to make India a hub for manufacturing, design and innovation, and aimed to lift manufacturing to 25 per cent of GDP. In 2020 the Covid disruption exposed how much India imported, from mobile phones to the active ingredients of medicines, and the government announced the Atmanirbhar Bharat (self-reliant India) package. PLI was its manufacturing engine. It flips the old logic: tariffs and quotas are a stick that makes imports dearer, whereas PLI is a carrot that pays firms for the extra goods they actually make here.
Import substitution protects the firm from imports. PLI rewards the firm for output. A firm that produces nothing extra receives nothing.
How the Incentive Works: Paying for Incremental Sales
Every PLI scheme rests on one phrase: incentive on incremental sales of goods manufactured in India, over a base year. The government fixes a base year, a target product list, and minimum investment and sales thresholds. The company then earns a percentage of its sales above the base-year level, for five years, and the percentage tapers (falls) over time. For the mobile-phone scheme, notified on 1 April 2020, the rate was 4 to 6 per cent for five years.
A phone maker sold ₹200 crore of India-made phones in the base year. In year 1 it sells ₹500 crore, and in year 2 ₹800 crore. Assume a 5 per cent rate (illustrative). What does it earn each year?
Two design choices matter. First, the incentive is tied to sales of goods made in India, which differs from an export subsidy (paid only on exports) and from a plain capital subsidy (paid whatever the firm produces). Second, the money is paid after the output, so the state pays for results rather than promises. That is why the objective was framed as scale: build "global champions" and a supplier base around them. The department that coordinates the schemes is DPIIT, while each administrative ministry implements its own, and a committee of secretaries (EGoS) under the Cabinet Secretary reviews them.
Fourteen Sectors and the Outlay Numbers
| When | What happened |
|---|---|
| March 2020 | First three schemes approved: mobile phones and electronic components (notified 1 April 2020), active pharmaceutical ingredients and key starting materials, and medical devices (₹3,420 crore, 2020-21 to 2027-28) |
| November 2020 | Ten more sectors approved, including autos, advanced chemistry cell (ACC) batteries, textiles, solar modules, specialty steel, food products, telecom, white goods and pharmaceuticals |
| 1 February 2021 | Budget 2021-22 commits about ₹1.97 lakh crore over five years from 2021-22 for 13 sectors |
| Later | Drones and drone components (September 2021) bring the count to 14 sectors; a second IT-hardware scheme followed in May 2023 |
Quote the number that matches the question. The Budget's ₹1.97 lakh crore relates to the 13 sectors in 2021. The Government's 2026 figure is ₹1.91 lakh crore of approved outlay across 14 sectors. Both appear in sources, so check the sector count in the stem. The sectors do not look alike once the results come in.
| Sector (cumulative to March 2026) | Investment (₹ crore) | Jobs reported | Investment per job |
|---|---|---|---|
| High-efficiency solar PV modules | 64,873 | 14,794 | about ₹4.4 crore |
| Pharmaceuticals | 45,158 | 1,14,880 | about ₹39 lakh |
| Automobiles and auto components | 44,326 | 67,820 | about ₹65 lakh |
| Large-scale electronics (mobiles) | 20,580 | 1,69,249 | about ₹12 lakh |
| Food products | 9,207 | 3,29,200 | about ₹2.8 lakh |
| Medical devices | 1,151 | 5,268 | about ₹22 lakh |
The last column is calculated from the PIB figures, and it carries a lesson. Solar and steel are capital-intensive: huge investment, few jobs per rupee. Food products and mobile assembly are labour-intensive. A scheme can therefore deliver output, jobs or both, and a good answer says which.
What PLI Has Delivered
As of 31 March 2026 the Government reports, across all schemes, actual investment of over ₹2.40 lakh crore, production and sales of over ₹22.66 lakh crore, exports of over ₹15.2 lakh crore and over 14.15 lakh jobs, direct and indirect. Cumulative exports of the PLI sectors were ₹4 lakh crore at the end of March 2024, so they nearly quadrupled in two years. Sector by sector, the best-documented gains are these.
- Mobile phones. Production has risen about 2.4 times since the scheme began. Imports have fallen about 77 per cent, and about 99.2 per cent of phones used in India are made here. Smartphones became India's single largest export product in 2025, ahead of petroleum products and cut diamonds. Our piece on the ₹62,500 crore Mobile Phone Manufacturing Scheme covers the sequel.
- Pharmaceuticals. Cumulative sales of over ₹3.64 lakh crore, with 1,931 products made domestically, including 191 bulk drugs made in India for the first time. The bulk-drug scheme added about 55,000 tonnes of capacity across 26 critical active ingredients, cutting dependence on imports of paracetamol, levofloxacin and norfloxacin.
- White goods. Air-conditioner compressor capacity rose from 1 million units in 2021 to 10 million in 2025-26.
- Textiles. The man-made-fibre and technical-textile scheme is now in its third round of approvals.
These figures are cumulative and move with every release: the ₹2.40 lakh crore investment is as of 31 March 2026, and earlier years carry smaller totals. In an MCQ, match the figure to the date and scheme named in the stem.
PLI-MD 2.0: What the First Round Taught
The medical-devices scheme is the hook, so know its design. PLI-MD 2.0 has four target segments: TS1 consumables, disposables and implants; TS2 critical components; TS3 high-end devices at a nascent stage of domestic manufacturing; and TS4 high-end devices that are only assembled in India today. Tapering incentives average about 5 per cent for TS1, about 9 per cent for TS2 and TS3, and 6 per cent for TS4. Applicants get three years to build their plant, may file any number of applications, and the window stays open for a long period.
The reforms answer a known weakness. Many devices were only assembled here from imported parts, so critical components get priority, which also helps small and medium firms. It is the same shift seen in electronics, where the Electronics Components Manufacturing Scheme aims to deepen the value chain. Targets include 3T MRI, PET-CT and ultrasound probes, which are not yet made in India.
The Criticism and the WTO Question
Assembly is not value addition. Phones assembled from imported chips and screens capture a thin slice of the device's value. The Economic Survey notes that during 2020-21 to 2024-25 the exports of PLI sectors grew by 10.6 per cent a year on average, while their imports grew by 12.6 per cent. Inputs are still bought abroad. This is why the newer mobile scheme pays more for domestic sourcing of components and for design and R&D.
The share has not moved. Make in India targeted 25 per cent of GDP for manufacturing. Our analysis of twelve years of Make in India shows the share still in the high teens. Other criticisms include a tilt towards large firms, the fiscal cost, and the difficulty of choosing which sectors win.
The WTO question. The WTO's Agreement on Subsidies and Countervailing Measures (SCM) prohibits two kinds of subsidy: those contingent on export performance and those contingent on using domestic over imported goods. India lost a 2019 panel case, DS541, on older export-linked schemes such as MEIS. PLI avoids that trap by paying on sales, not on exports. In October 2025, however, China asked for consultations with India, the first step of a WTO dispute, over the PLI schemes for autos and ACC batteries and the electric-car scheme, alleging that domestic-value-addition conditions favour local goods. A consultation request is not a ruling, and the question remains open. Our page on trade and the WTO covers the rules.
How UPSC Has Asked It: Past Papers Solved
These are CDS GK questions on the policy theme and on trade terms that sit beside it.
Which of the following statements with regard to the 'Make in India' initiative is/are correct? 1. It was launched in the year 2018. 2. Its objective is to foster innovation.
(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
Answer: (b). Make in India began on 25 September 2014, not 2018, so statement 1 is wrong. Fostering innovation is a stated aim.
The Atmanirbhar Bharat Scheme announced by the Government helps in: 1. Enhancing India's manufacturing capabilities and exports across the industries 2. Incentivizing foreign investments for domestic production
(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
Answer: (c). PLI is its manufacturing engine, and it is open to foreign as well as Indian firms that produce in India, so both statements hold. Choosing "1 only" ignores that foreign investment is part of the design.
Consider the following statements: 1. India runs a current account deficit 2. Merchandise imports of India exceed exports. Which of the statements given above is/are correct?
(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
Answer: (c). India's goods imports (crude oil, gold, electronics) exceed exports, and the services surplus and remittances only partly offset that. This gap is the problem PLI wants to narrow. Our page on balance of payments explains the accounts.
Which one of the following events is not correctly matched with the year in which it happened?
(a) Inauguration of the SWIFT system of electronic interbank fund transfers worldwide — 1985 (b) Conclusion of the Uruguay Round of GATT — 1994 (c) Inauguration of the World Trade Organization — 1995 (d) Establishment of the first wholly electronic stock exchange (Nasdaq) — 1971
Answer: (a). SWIFT began operating in the 1970s, not 1985. The Uruguay Round ended in 1994 and the WTO began in 1995, the body whose subsidy rules now frame the PLI debate.
ASEEM is
(a) Aatmanirbhar Skilled Employee Employer Measurement (b) Aatmanirbhar Skilled Employee Employer Mapping (c) Aatmanirbhar Skilled Employee Enterprises Medium (d) Automatic Skilled Employer Mission
Answer: (b). ASEEM is a portal that maps skilled workers to employers, launched in the Atmanirbhar Bharat period. The look-alike "Measurement" is the trap.
UPSC tests the labels (Make in India 2014, Atmanirbhar Bharat), the objective of a scheme (manufacturing and exports), and the surrounding trade terms. Learn the date, the aim and the instrument.
Practice MCQs (with answers)
- A PLI scheme pays a firm an incentive on
- its imports of raw materials
- incremental sales of goods manufactured in India over a base year
- a fixed share of its total investment
- the number of workers it employs
- Make in India was launched on
- 25 September 2014
- 15 August 2015
- 12 May 2020
- 1 February 2021
- Which statement correctly contrasts import substitution with PLI?
- Both rely mainly on import quotas
- PLI relies on quotas and import substitution on cash payments
- Import substitution shields firms from imports, while PLI rewards extra domestic output
- Both are payments linked only to exports
- The nodal department that coordinates and monitors the PLI schemes is
- the Department of Revenue
- NITI Aayog
- the Budget Division of the Finance Ministry
- DPIIT
- In PLI-MD 2.0, the target segment for high-end devices that are only assembled in India today is
- TS4
- TS1
- TS2
- TS3
- Under the WTO's SCM Agreement, a subsidy that depends on using domestic goods rather than imported goods is
- always permitted for developing countries
- prohibited
- legal if paid after the sale
- covered only by the TRIPS agreement
- A firm's base-year sales were ₹200 crore and it sold ₹500 crore this year. At a 5 per cent PLI rate, its incentive is
- ₹25 crore
- ₹10 crore
- ₹15 crore
- ₹35 crore
- According to PIB (July 2026), the share of mobile phones used in India that are made domestically is about
- 50 per cent
- 75 per cent
- 90 per cent
- 99.2 per cent
1-b, 2-a, 3-c, 4-d, 5-a, 6-b, 7-c, 8-d. Q1: only the extra sales above the base year earn the incentive. Q6: the SCM Agreement prohibits both export-contingent and local-content subsidies, which is the core of the WTO argument. Q7: (500 − 200) × 5% = ₹15 crore, not 5% of 500.
Quick Revision
- PLI = incentive on incremental sales of goods made in India over a base year, for five years, tapering. Mobile scheme: 4 to 6 per cent, notified 1 April 2020.
- Timeline: three schemes in March 2020 (mobiles and components, APIs, medical devices); ten more in November 2020; Budget 2021-22 commits ₹1.97 lakh crore for 13 sectors; 14 sectors, ₹1.91 lakh crore approved in 2026.
- Nodal: DPIIT, with line ministries implementing and an EGoS review. Make in India: 25 September 2014. Atmanirbhar Bharat: 2020.
- Results to March 2026: investment ₹2.40 lakh crore, production and sales ₹22.66 lakh crore, exports ₹15.2 lakh crore, 14.15 lakh jobs. Phones: 99.2 per cent made in India, imports down about 77 per cent.
- PLI-MD: launched 2020-21 with ₹3,420 crore; extended to 2035-36 on 10 November 2026 with about ₹2,700 crore; four target segments TS1 to TS4; no minimum sales threshold.
- Critique: assembly not value addition (PLI-sector imports grew faster than exports); manufacturing share not near 25 per cent; WTO SCM prohibits export-contingent and local-content subsidies, and China sought consultations in October 2025.
Frequently asked questions
What is a PLI scheme?
A Production Linked Incentive scheme pays a manufacturer a percentage of its sales above a base-year level for goods made in India, usually for five years with a tapering rate. A firm that adds no output earns no incentive. It differs from a tariff, which taxes imports, because it rewards domestic production.
How many sectors are covered and what is the outlay?
The Government says PLI covers 14 sectors with an approved outlay of about ₹1.91 lakh crore. The Union Budget of 2021-22 had committed about ₹1.97 lakh crore over five years for 13 sectors, so quote the figure that matches the sector count in the question.
What has PLI achieved so far?
By 31 March 2026 the schemes had reported over ₹2.40 lakh crore of investment, ₹22.66 lakh crore of production and sales, ₹15.2 lakh crore of exports and over 14 lakh jobs. About 99.2 per cent of mobile phones used in India are now made here, and 191 bulk drugs are made in India for the first time.
What changed in PLI for medical devices in November 2026?
The scheme was extended to 2035-36 with about ₹2,700 crore of outlay, a minimum sales threshold was dropped and the minimum investment was trimmed. It has four target segments, with priority for critical components and for high-end devices such as 3T MRI and PET-CT that India does not yet make.
Is PLI allowed under WTO rules?
The WTO's SCM Agreement prohibits subsidies contingent on exports or on the use of domestic over imported goods. PLI pays on sales, not on exports, but critics say domestic value-addition conditions in some schemes favour local goods. China requested WTO consultations on India's auto and battery PLI schemes in October 2025, and no ruling has been issued.
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