India’s PLI Scheme: Mixed Results on Jobs & Disbursals – CLSA

A recent report by CLSA indicates that India’s Production-Linked Incentive (PLI) schemes have yielded a “mixed bag” of outcomes up to FY26. While the schemes successfully spurred capital expenditure and sales, they significantly underperformed in incentive disbursals and the crucial aspect of job creation.

The schemes successfully stimulated capital expenditure, with actual investments surpassing Rs 2.4 lakh crore. This met approximately 80% of investment expectations, while production and sales saw a boost of around Rs 22.7 lakh crore, fulfilling about 60% of production expectations.

However, the report from CLSA points to notable shortfalls in government fund utilization and overall employment generation. This indicates a crucial area where the scheme’s impact has not aligned with initial policy goals.

Cumulative incentive disbursements amounted to only Rs 35,400 crore, representing less than 20% of the initially allocated funds, specifically 18%. This significant lag in disbursal highlights challenges in the operational aspects of the scheme.

Furthermore, job creation reached nearly 1.4 million positions, including 0.84 million direct jobs. This figure falls short of the original minimum target of 10 million jobs by less than 15%, indicating a weaker employment intensity than anticipated.

CLSA’s analysis concludes that the employment intensity stemming from investments made under the PLI schemes has been substantially weaker than what policymakers had initially envisioned. This structural reality suggests a need to re-evaluate the schemes’ effectiveness in broad-based job generation for India.