India’s Production-Linked Incentive (PLI) scheme, launched in 2021 to boost domestic manufacturing and value-added exports, has seen its strongest impact in the electronics and pharmaceutical sectors in FY25, with these two sectors collectively accounting for nearly 70% of the total PLI disbursements during the year.

According to official data, of the Rs. 10,114 crore (US$ 1.18 billion) released under the PLI scheme across 14 targeted sectors, electronics manufacturers secured Rs. 5,732 crore (US$ 666.3 million), while pharmaceutical companies received Rs. 2,328 crore (US$ 270.6 million). These disbursements reflect the operational success and rapid scalability of both sectors under the scheme’s framework.

Electronics Sector: Flagship PLI Beneficiary

The electronics industry, a major focus area under the PLI initiative, has demonstrated substantial growth in both manufacturing scale and exports. In FY25, electronics emerged among India’s top three export categories, posting a 32.46% growth over the previous fiscal year. Exports increased from Rs. 2,50,519 crore (US$ 29.12 billion) in FY24 to Rs. 3,31,904 crore (US$ 38.58 billion) in FY25.

This marks a remarkable rise from FY22, when exports stood at Rs. 1,35,067 crore (US$ 15.7 billion), showcasing the sector’s transformation into a high-growth, export-driven ecosystem. Particularly, computer hardware and peripherals posted 101% export growth, with shipments reaching Rs. 12,044 crore (US$ 1.4 billion), signalling growing capabilities in high-value segments.

India’s primary export destinations for electronic goods in FY25 included:

• United Arab Emirates (UAE)

• United States (US)

• Netherlands

• United Kingdom (UK)

• Italy

The PLI-driven scale-up has enhanced India’s position as an alternative electronics manufacturing hub, especially amid global shifts away from concentrated production in East Asia.

Pharmaceutical Sector: Global Reach and Competitiveness

The pharmaceutical industry, another core PLI beneficiary, has recorded steady export growth under the scheme. In FY25, India’s pharma exports reached Rs. 2,62,392 crore (US$ 30.5 billion), registering a 10% annual growth. Indian pharmaceutical products now reach over 200 countries, reinforcing the country's status as a trusted global healthcare supplier.

The PLI outlay of Rs. 2,328 crore for the pharma sector in FY25 has accelerated production of formulations, Active Pharmaceutical Ingredients (APIs), and high-value generics, contributing to both export volumes and self-reliance in critical drug components.

The success of Indian pharma companies under the scheme has also enhanced foreign investor confidence and attracted joint ventures, technology transfers, and global R&D partnerships, particularly in biopharma and vaccine development.

Overall FY25 PLI Disbursements: Sector-wise Breakdown

The government disbursed Rs. 10,114 crore under the PLI scheme in FY25, slightly up from Rs. 9,721 crore (US$ 1.13 billion) in FY24. Apart from electronics and pharmaceuticals, other sectors also received notable allocations:

• Telecom: Rs. 840 crore (US$ 97.6 million)

• Food Processing: Rs. 448 crore (US$ 52.1 million)

• Automobiles and Auto Components: Rs. 322 crore (US$ 38.6 million)

• Other Sectors (incl. White Goods, Medical Devices, Bulk Drugs, Specialty Steel, Textiles, Drones): Received smaller but strategically relevant amounts

These disbursements reflect varying levels of maturity and project readiness across different sectors. While some, like electronics and pharma, have achieved production-linked milestones swiftly, others are in earlier stages of ramp-up or facility development.

PLI Scheme: A Structural Manufacturing Catalyst

The PLI scheme, with a total allocation of Rs. 1,97,000 crore (US$ 22.90 billion), is India’s largest ever industrial incentive programme, spanning key sectors aimed at enhancing global competitiveness, reducing import dependence, and boosting employment.

Key objectives of the scheme include:

• Attracting foreign and domestic investments

• Encouraging incremental production and exports

• Strengthening domestic value chains

• Supporting technology development and innovation

• Building scale in high-potential sectors

Under this structure, beneficiary firms must achieve predefined investment and production thresholds to receive incentive payouts, ensuring accountability and measurable results.

Impact on Employment, Exports, and FDI

The early results from FY25 suggest that the PLI scheme has had a tangible impact on job creation, export earnings, and FDI inflows, particularly in manufacturing-led sectors.

For instance:

• Electronics PLI participants have contributed to direct and indirect employment creation in assembly, testing, component manufacturing, and logistics.

• Pharma firms have expanded API production and added formulation units, boosting both domestic supply chains and export competitiveness.

• The success of both sectors is fostering clustering effects, with the development of supplier ecosystems, logistics networks, and skill hubs in regions like Tamil Nadu, Uttar Pradesh, Telangana, Gujarat, and Maharashtra.

Challenges and Future Roadmap

Despite early successes, challenges persist, such as:

• Regulatory bottlenecks and land acquisition delays

• High compliance costs for new entrants

• Global pricing pressures, especially in pharma

• Technology gaps in high-end electronic components

To address these, the government is considering:

• Extending PLI support to more subsectors, especially in semiconductors, wearables, and medical electronics

• Creating national-level testing labs and design innovation centres

• Strengthening infrastructure connectivity and skill development pipelines

Summary

The PLI scheme in FY25 has seen dominant disbursements to the electronics and pharmaceutical sectors, validating their readiness to scale and contribute meaningfully to India’s manufacturing and export goals. With over Rs. 8,000 crore allocated to these two sectors alone, the scheme is proving to be a transformational policy tool, accelerating India's ambition to become a global production hub. Continued focus on addressing execution challenges and supporting emerging sectors will be key to unlocking the scheme’s full potential in the coming years.

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