How to Apply for Production Linked Incentive (PLI) Scheme for Businesses?

Starting a manufacturing business in India comes with unique opportunities, especially with government initiatives like the Production Linked Incentive (PLI) scheme. The government scheme is designed to accelerate domestic manufacturing, reduce import dependence, and position India as a global manufacturing hub. This comprehensive guide will explain what the PLI scheme is, why it was launched, which sectors it covers, and how your startup or MSME can leverage it. We will also walk you through the application process and how StartupFlora’s scheme experts can help you successfully secure these incentives.

What is the PLI (Production Linked Incentive) Scheme?

The Production Linked Incentive (PLI) scheme is a government policy that offers financial incentives to manufacturers on incremental sales of goods made in India. Launched in March 2020, it is a cornerstone of the Atmanirbhar Bharat (self-reliant India) initiative. The scheme encourages both domestic and foreign companies to set up or expand manufacturing units in India.

Eligible manufacturers receive a percentage of their additional sales as cash incentives over a specific period, usually five years, provided they meet certain investment and production targets. The approach attracts large-scale investments, creates employment, and enhances the global competitiveness of Indian industries.

In essence, PLI is a performance-linked incentive – the more a company produces and sells locally, the higher the incentive it earns. This structure ensures that government support directly translates into tangible industrial growth.

Why Was the PLI Scheme Launched?

The PLI scheme was introduced as a strategic move to make India a global manufacturing hub. Instead of the government directly investing in capital-intensive sectors, the scheme invites global companies with sufficient capital and advanced technology to manufacture in India. It also encourages domestic companies to scale up their operations.

The objectives of the scheme include:

• Boosting Local Production: By increasing output in key sectors and substituting imports with “Made in India” products.
• Promoting Exports: Encouraging manufacturers to produce at scale and export surplus goods, improving India’s share in global supply chains.
• Generating Employment: Large manufacturing projects create extensive supply chains and both direct and indirect jobs. PLI programs have reportedly created around 9.5 lakh jobs so far.
• Attracting Foreign Investment: Global brands like Asus and HP are investing in India to take advantage of PLI incentives, bringing in capital and technology.

Sectors and Industries Covered Under the PLI Scheme

The PLI scheme is not a single program but a collection of incentive programs covering 14 key sectors of the economy. Each sector has its own budget, eligibility criteria, and implementing ministry. As of 2025, the covered sectors include:

The government has approved a total incentive of around ₹1.97 lakh crore ($28 billion) across these sectors. Initially, the scheme targeted three industries (mobile manufacturing, electrical components, and medical devices) but was expanded to 13–14 sectors due to its transformative potential.

How Businesses Benefit from PLI (Sector-Wise Opportunities)

The PLI scheme makes manufacturing in India more lucrative. Here is a sector-wise breakdown of how startups and MSMEs can benefit:

Electronics & Semiconductors

• Incentives of 4–6% on incremental sales have attracted global and domestic players.
• Companies like Lava International and Micromax increased production by partnering with global brands.
• The ₹76,000 crore semiconductor incentive program launched in 2021 supports chip fabrication and design, including Design-Linked Incentives (DLI) for fabless startups.
• Example: Rajasthan-based Sahasra Semiconductors leveraged the PLI to set up India’s first memory chip assembly and packaging plant.

Renewable Energy (Solar)

• To reduce reliance on imported panels, the PLI for High-Efficiency Solar PV Modules initially allocated ₹4,500 crore, increased to ₹24,000 crore.
• Encourages gigawatt-scale solar module manufacturing.
• Startups like Waaree Energies and Vikram Solar expanded production to qualify for incentives. Looking for a loan for your solar business? StartupFlora experts are here to help you.
• Large players such as Reliance and Adani are making significant investments, creating a full solar supply chain.

Textiles & Apparel

• ₹10,683 crore outlay to promote MMF apparel, fabrics, and technical textiles.
• Encourages expansion into high-value synthetic textiles.
• Early beneficiaries include mid-sized Indian textile companies investing ₹1,536 crore as of 2022.
• Expected to create 7.5 lakh jobs and modern mega textile parks.

Automobiles & Advanced Batteries

• ₹26,000 crore for EVs and hydrogen fuel vehicles; ₹18,100 crore for ACC batteries.
• Startups like Ola Electric awarded 20 GWh capacity under ACC Battery PLI.
• Supports EV and component manufacturing, reduces oil imports, and strengthens India’s export competitiveness.

Drones & Aerospace

• ₹120 crore over three years for drones and components.
• Low entry barriers – only ₹2 crore annual sales required for eligibility.
• Startups like ideaForge, Aarav Unmanned Systems, and Garuda Aerospace are benefitting.
• Incentives help scale production for agriculture, surveillance, and logistics applications.

Other Sectors

• Pharmaceuticals & Medical Devices: ₹15,000 crore for pharma and ₹3,420 crore for med-tech.
• Telecom Equipment: ₹12,195 crore for indigenous production; Tejas Networks benefitted.
• White Goods: ₹6,238 crore supports AC and LED manufacturing.
• Specialty Steel: ₹6,322 crore encourages domestic production of value-added steel.

PLI Scheme Budget and Recent Boosts

The Union Budget 2025–26 nearly doubled the allocation for PLI programs, from ₹9,360 crore to ₹19,482 crore. This aims to accelerate manufacturing and exports in sectors such as electronics, textiles, and automobiles.

Significant sectoral hikes include:

• Electronics & IT Hardware: ₹9,000 crore
• Textiles: ₹1,148 crore
• Automobiles & Auto Components: ₹2,819 crore
• Advanced Batteries (ACC): ₹156 crore
• Pharmaceuticals: ₹2,445 crore
• White Goods (AC/LED): ₹445 crore

This increase ensures that startups and companies are more likely to receive promised incentives and enables potential extension or expansion of successful PLI programs.

Top Startups & MSMEs Benefiting from PLI Schemes

Several startups and MSMEs have successfully leveraged PLI incentives:

• ideaForge Technology (Drones): Expanded production, launched IPO in 2023.
• Garuda Aerospace (Drones): Built a factory, creating local jobs.
• Lava International (Mobile Phones): Boosted production, started exports.
• Bhagwati Products Ltd. (Micromax): Revived smartphones, partnered with global brands.
• Ola Electric (EV Batteries & Vehicles): Built India’s largest lithium-ion cell factory.
• Neolync (Electronics Hardware): Secured OEM contracts and PLI approval for smartphones.
• Sahasra Semiconductors: Set up memory chip assembly and packaging plant under PLI and SPECS schemes.

Smaller suppliers and mid-sized MSMEs indirectly benefit by supplying components or services to these PLI-approved companies, creating a cascading ecosystem effect.

How to Apply for the PLI Scheme (Step-by-Step)

1. Identify Relevant PLI Scheme: Match your product to a PLI sector. Review eligibility criteria, incentive rates, and deadlines.
2. Register on the PLI Portal: Create an account on government portals like pli-eda.gov.in.
3. Fill the Application Form: Include company details, financials, project plan, technical specifications, and employment projections.
4. Upload Required Documents: Certificate of incorporation, PAN, GST, audited financial statements, DPR/business plan, and sector-specific licenses.
5. Submit the Application: Ensure completeness and accuracy to avoid rejection.
6. Application Review & Approval: Government agencies verify eligibility and projections. Respond promptly to any queries.
7. Selection & Letter of Approval: Receive approval letter outlining incentive rates, base and target years, and any additional requirements.
8. Set Up and Meet Investment/Production Targets: Invest in machinery, start production, and meet targets within specified timelines.
9. Claim Incentives: Submit annual claims with CA-certified sales and production data. Payouts are made after verification.
10. Compliance & Monitoring: Be prepared for audits. Maintain domestic value addition and production standards to continue receiving incentives.

How StartupFlora’s Scheme Expert Team Will Guide You

StartupFlora simplifies PLI applications with services like:

• Eligibility Assessment: Identify suitable PLI schemes and determine qualification.
• DPR Preparation: Craft compelling project reports with projections and market analysis.
• Documentation Support: End-to-end assistance in compiling corporate documents, GST/PAN, and sector-specific licenses.
• Application Submission & Follow-up: Ensure accurate form submission and liaise with government authorities.
• Claiming Incentives: Track production and sales data to successfully claim incentives.

With StartupFlora, the PLI application process becomes structured and stress-free, allowing startups to focus on growth while experts handle compliance and strategy.

FAQ (Frequently Asked Questions)

1. Is PLI a loan or grant?
It’s neither; PLI is a performance-linked incentive. Companies receive a percentage of incremental sales as cash.

2. Can startups apply?
Yes, if they meet scheme criteria. Some schemes, like drones, have low thresholds. Startups can also partner with established firms to qualify.

3. How to know eligibility?
Check product category coverage, investment/sales thresholds, and domestic manufacturing capability.

4. What happens after selection?
Invest, produce, meet incremental targets, and submit annual claims. Compliance with production, localization, and reporting is required.

5. Are PLI schemes effective?
Yes, especially in electronics and EVs. Targets may be ambitious, but with proper strategy, PLI can amplify growth.

6. Will there be new PLIs?
Many schemes are 5-year programs ending 2025–26, but the government may extend or introduce new schemes in sectors like toys, bicycles, or leather.

With proper guidance and planning, the PLI scheme can be a game-changer for startups and MSMEs in India. Leveraging these incentives allows businesses to scale, compete globally, and contribute to India’s vision of a self-reliant economy.