A Pivotal Shift in India’s Industrial Journey
India’s attempt to transform into a manufacturing powerhouse with global recognition came with the introduction of the PLI (Production Linked Incentive) Scheme which aimed to increase investment in India by promoting large-scale production and domestic manufacturing along with reducing imports. The PLI schemes were introduced in 2020 as a means to revive India’s industrial framework after the COVID recession and realign it into global supply chains.
As we approach the end of the initial five-year period of several PLI sectors, some of the gaps are becoming clearly visible. While some sectors have performed well, others have not utilized their allocated funds to their full potential. Startups and MSMEs found the eligibility requirements too demanding to meet. A significant portion of the Tier 2–3 ecosystem players have been ignored. While there is no doubt that the intent behind the PLI was to enable transformational growth, the outcomes have proved that it was not enough to fully sustain it.
India now needs a shift in policy—from a scheme-based, reactive approach, to a long-term proactive industrial strategy focused on ecosystem development. This goes beyond just policy changes; it requires rethinking the structure: moving from reactive schemes to proactive ecosystem development upon which the entire incentive framework can be built. To turn the “lapse” of PLI into an “upload” will be a matter of completely recalibrating governance around infrastructure, innovation, labor, innovation, and market linkages.
Decoding the PLI Framework: A Base But No Apex
The PLI schemes were carefully tailored to achieve specific sector-level outputs. For example, in the case of electronics, the aim was to position India as a central hub for smartphone assembly. In pharmaceuticals, the objective was to increase the domestic production of Active Pharmaceutical Ingredients (APIs). Subsequent waves also included solar module manufacturing, textiles, food processing, telecom, and semiconductors.
While PLI realized significant results in a short time, especially in garnering large foreign investment and champions in India, it was unaccompanied by some glaring shortcomings. Framework regions without holistic pivots towards skill implementation, R&D incentives, and export logistics hampered synergy. Large-scale spending drove the framework’s narrow focus on big-ticket foreign investments. Ambitious step progression output milestones further compounded subsidy cap spending.
This limited its potential to act as a driver of a thorough industrial transformation to just a production enhancer. More importantly, it was clear that PLI’s sustained advantages were contingent on broader reforms in the ease of doing business, local innovation ecosystems, and MSME integration.
Related: Government Schemes in Bihar: Boosting Growth and Welfare
Why India Needs an Industrial Upstream Policy, Not Another Scheme
A scheme is usually limited in scope, time-bound, and often conditional. It attempts to resolve a specific problem, usually as a reaction to an evolving challenge. Policy, on the other hand, self-defines and is much more structural in nature. It builds a framework, offers stability, enables foresight, and encourages long-term investment and innovation.
India’s upcoming manufacturing leap cannot be anchored to temporary subsidy cycles. Domestic entrepreneurs, global investors, and ecosystem partners need a cohesive industrial policy that integrates regionally fragmented ecosystems and aligns capital with capability.
Over-reliance on PLI has its greatest drawbacks, one of which is incentive dependency with no value creation. PPC’s lack of policy frameworks broader than its leash means companies may optimize for short-term subsidy rather than long-term competitiveness. When the scheme ends, so does the motive to either remain or scale. This creates uneven development and exposes the nation to global price shocks, leveraged currency instability, and a protectionist backlash.
India has the potential to transcend subsidized reactiveness through adopting robust frameworks which would shift the nation from a subsidized reactive state to proactive manufacturing superpower.
What the Next-Generation Industrial Policy Should Focus On
Real change requires an “upload policy” with integration, coherence, and depth, which supports the full lifecycle of industrial growth facilitating innovation with the necessary infrastructure, talent, and access to markets.
Building Sectoral Depth and Specialization
As opposed to thinly distributing incentives across 14 or more sectors, India should focus on strengthening these areas where there is a comparative or latent competitive advantage. These include, but are not limited to specialty chemicals, electronics sub-components, EV powertrains, agro-processing, precision engineering, and green technologies.
These sectors require specific exports-linked incentives and promotion channels beyond simple output incentives, technology roadmaps, and bespoke rewards.
Reintegrate MSMEs and Tier-2 Suppliers
The PLI’s focus on large capital-intensive units ignores the critical importance of MSMEs sustain an industrial ecosystem. Future policy must extend technology access, quality certification support, and working capital reforms to enable MSMEs to become major suppliers instead of perpetual informal participants.
Such policies need to foster technology-based and market-ready cluster formation and supply chain interconnections. This will help anchor multinational investments into the local economy.
Related: MSME Schemes: Unlock MSME Schemes, Subsidies, and Startup Success
Incentivize Domestic R&D and IP Generation
Manufacturing competitiveness needs to be complemented by innovation. India cannot compete on labor costs alone. The current PLI model incentivizes output, not intellectual property ownership. The policy should be improved by integrating tax credits for R&D, industrial technology research grants, and commercialization support for domestically patented technologies.
When linked with academic research, establishing innovation hubs in industrial areas can have tremendous multiplier effects.
Integrate Employment-Linked Incentives (ELI)
India cannot afford to grow without increasing jobs at the same time. While automation helps businesses become more efficient, employment is still a key socio-economic mandate. The new industrial policy must incorporate ELI frameworks that incentivize formal job creation at scale within women-centric, skill-intensive sectors like textiles, food processing, and packaging.
This approach will also need to align with social security structures as well as vocational skilling programs aimed at encouraging formal job registration.
Incorporate Green Industrialization
With ESG standards tightening, Indian industry cannot afford to overlook sustainability. The policy should incentivize industries with active spending toward pollution abatement, circular material economization, green energy use, and carbon mitigation.
This also incorporates green hydrogen, EV components, biodegradable packaging, and clean chemistry production. Green manufacturing needs to be viewed as a sustainable competitive advantage rather than merely a compliance cost.
Expand State-Level Manufacturing Autonomy
States are where the real competition for manufacturing. It is up to the States to define their policies, while the Central government should focus on providing the strategic framework, intelligence data, and capital incentive pool.
State-sponsored industrial and skill zones, logistics hubs, and inter-regional corridors must be rigorously benchmarked, interoperable, and globally competitive.
How Opportunities in Different Sectors of India Looks After PLI Implementation
To understand the strategic focus of a policy, we look at the manufacturing sectors that are likely to emerge over the next 5 years. Such sectors are Forex earning opportunities which are important for economic reasons and also for self-geopolitical reliance reasons.
Final Strategy for Entrepreneurs and Startups
Second, they have to build transparency into their operations from day one to prepare for ESG regulations.
Third, they have to think in clusters, both geographically and functionally.
For instance, a food processing startup should integrate not just machinery, but also farmer cooperatives, logistics startups, and packaging recyclers into the value chain. A chemical startup must also consider downstream applications, effluent standards, and specialty molecule substitutions to be compliant.
Policy-ready startups are those that construct models that are modular, scalable, integrated with diverse skills, and compliant with global standards.
Precision Component Manufacturing: A Policy-Aligned Opportunity
One such emerging opportunity aligned with future policy goals is precision component manufacturing used in electric vehicles (EVs), aerospace, defense, and medical technology (med-tech).
Process Outline
- Material Selection and Forging
Sourcing and forging processes for titanium and aluminum require high strength alloys. - CNC Machining
Computer numerical control (CNC) machines offer micron-level precision machining. - Heat Treatment and Surface Coating
This process increases fatigue resistance and anti-corrosion capabilities of parts. - Non-Destructive Testing (NDT)
NDT ensures the integrity of components without damaging them. - Assembly and Calibration
Components are checked for fitment in engines or defense systems.
This industry requires non-local skilled labor, robotics, compliance at a global level, and a new policy to support access to skilling centers, testing labs, and support with quality certification would help transform India’s value chain in manufacturing.
NPCS: Empowering Entrepreneurs for the Policy-Driven Era
To successfully navigate the next decade of Indian industrialization, envisioning properly engineered, legally compliant, and technical project frameworks is essential. This is where Niir Project Consultancy Services (NPCS) comes into the picture.
NPCS: What They Offer
- Prepares Market Survey Reports Along With Detailed Techno-Economic Feasibility Reports.
- Offer advice regarding manufacturing processes, materials, plant layout, and regulations.
- Assesses Technical, Market, and Operational feasibility for potential new industries for entrepreneurs.
NPCS ensures that you are future-ready and provides a blueprint that aligns with national priorities whether you wish to enter green manufacturing, agro-industrial value chains, specialty chemicals, or electronics assembly.
Conclusion: From Lapse to Upload, from Scheme to Strategy
India’s future cannot be based on a scheme. The PLI model had its merits — it provided a jolt of energy, capital, and focus to Indian manufacturing. Now, however, the goal should be to turn that momentum into a comprehensive, long term, adaptable, and inclusive industrial policy.
This policy has to focus on people, products, processes, and the planet.
It needs to eliminate friction and red tape, incentivize innovative solutions, and reward enduring value over superficial outputs.
Most importantly, it should galvanize a new breed of industrial entrepreneurs—builders of not just factories, but futures.
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