Govt weighs PLI 2.0 with sharper focus on high-performing sectors

New Delhi: India is targeting the second phase of its production-linked incentive (PLI) programme that will focus on giving additional support to high-performing sectors, while trimming exposure to low-yielding ones, as the government recalibrates its flagship manufacturing policy, officials familiar with the development said.

"A second phase of the PLI programmes is being considered," a senior official told ET, adding discussions to select sectors to which incentives will be continued are underway.

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Companies excluded from earlier PLI rounds will be encouraged to apply. "The new schemes may not be called PLI...but will function with similar intent to encourage local production and import substitution," the official said.

A second official said extension and revision to schemes for sectors such as textiles are being examined.

"The proposed changes are likely to include a revision in the minimum investment threshold, expansion of the range of eligible products, and a reduction in the incremental turnover requirement," this official said, adding that the idea is to make the scheme more industry friendly and effective.

A similar exercise is underway for the automobile sector.

There are 14 PLI schemes currently operational with a total approved outlay of ₹1.91 lakh crore. The programme launched during the Covid period aims to boost domestic manufacturing, attract investments, enhance exports, generate employment and strengthen India's integration with global value chains.

PLI schemes resulted in actual investments of more than ₹2.40 lakh crore, production or sales of more than ₹22.66 lakh crore, and exports of more than ₹15.2 lakh crore, per government data. Cumulative incentive disbursement as of March 2026 stood at ₹35,354 crore. The PLI initiative has resulted in "remarkable trade performance of these sectors", according to the 2025-26 Economic Survey. To be sure, a few sectors recorded strong export growth, with average annual growth rate (AAGR) exceeding 20% during FY21-FY25.

Also Read: Large-scale electronics PLI catalyses Rs 96,000 cr investment in mobile manufacturing: MoS IT

"These include IT hardware (77.2%), ACC batteries (45.0%), electronics (38.8 %), solar PV (23.9%), and speciality steel (22.5%)," the survey said.

In contrast, certain sectors showed moderate export growth-with less than 20% AAGR-such as automobiles (14.1%, textiles (7.8%), food products (6.7%), pharma (6.0%), medical devices (6.5%), white goods (4.8%), bulk drugs and active pharmaceutical ingredients (APIs) (3.5%), and drones (3.9%).

The survey noted that most of these sectors have also experienced positive import growth, notably automobiles (15.1), textiles (13.2), food products (12.1), and pharma (7.4), "suggesting a steady expansion of domestic activity alongside continued reliance on imported inputs and technology."