India Ends $23B Manufacturing Incentive Scheme Amid Slow Progress and Missed Targets

India is ending its $23 billion Production-Linked Incentive (PLI) scheme, aimed at boosting domestic manufacturing and reducing reliance on China, just four years after its launch. According to government sources, the initiative will not be extended beyond its initial 14 sectors, and deadlines will remain unchanged, despite company requests.

The PLI program, which attracted 750 firms—including Foxconn and Reliance Industries—offered cash incentives for meeting production goals. However, by October 2024, only $151.9 billion worth of goods had been produced—just 37% of the target—with under 8% of funds disbursed. Although mobile and pharmaceutical sectors saw growth, most others, including steel, solar, and textiles, underperformed.

The government touted $163 billion in output by November 2024 but did not confirm the program's future. Critics blame red tape and slow subsidy payouts for discouraging manufacturers. Notably, eight of twelve solar firms, including those linked to Adani, JSW, and Reliance, are unlikely to meet targets.

India’s manufacturing share in GDP has fallen from 15.4% to 14.3% since the scheme began, missing the goal of 25% by 2025. Analysts say the plan was a vital chance to position India as a global manufacturing hub during China’s COVID-era slowdown and amid U.S.-China tensions.

Some officials say the end of PLI doesn’t mean India is abandoning its manufacturing goals. Future alternatives may include reimbursing plant setup costs to offer faster returns. Experts, however, warn that missing this opportunity could hinder India's long-term industrial ambitions, especially as global trade competition intensifies.