2025 · GS Paper 3 · Q12 · 15 marks
Discuss the rationale of the Production Linked Incentive (PLI) scheme. What are its achievements ? In what way can the functioning and outcomes of the scheme be improved ?
In short
The PLI scheme pays output-linked incentives to offset India's manufacturing cost disability and strategic import dependence, and has scaled electronics, investment and exports, but needs deeper value addition, faster delivery and wider inclusion. Electronics production rose from Rs 6.4 lakh crore in FY22 to Rs 11.3 lakh crore in FY25.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 282 words
Stalled manufacturing
Manufacturing has hovered around 15-17% of GDP for decades, too small to absorb workers leaving farms.
Cost disability
MeitY estimated an 8.5-11% cost disadvantage for electronics makers, which a 4-6% incentive was designed to offset.
Strategic dependence
COVID-19 shocks exposed reliance on China for APIs, electronics and solar modules.
Electronics surge
Production rose from ₹6.4 lakh crore in FY22 to ₹11.3 lakh crore in FY25 (Economic Survey 2025-26), making India the second-largest mobile maker.
Exports and investment
Mobile exports topped ₹2 lakh crore in 2024-25, and actual investment crossed ₹2 lakh crore by September 2025 (DPIIT).
Health security
21 medical device projects now make 54 devices earlier imported.
Deepen value addition
Since mobile PLI largely rewards assembly (Rajan and co-authors, 2023), the Electronics Component Manufacturing Scheme (2025) must build components.
Fix uneven delivery
Reallocate unspent outlays from lagging sectors such as textiles and ACC batteries, and settle claims on time.
Ecosystem and inclusion
Pair incentives with logistics under PM Gati Shakti, skills, MSME access and labour-intensive sectors such as footwear.
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Question from the official UPSC Civil Services (Main) Examination 2025 paper. Answer written by Ghissu's engine and checked against our editorial standards. Found an error? Tell us and we correct it within 48 hours.