/ Foreign Clients · PLI Scheme · Updated 2026-10-15

India PLI schemes, cash incentive for foreign manufacturers.

India launched Production-Linked Incentive (PLI) schemes starting 2020 covering 14 strategic sectors. Foreign manufacturers establishing Indian production can receive cash incentive of 4-6% of incremental sales over base year, paid in cash over 5-year scheme period. Combined with Section 115BAB 15% corporate tax for new manufacturing, India offers one of the most generous manufacturing-destination incentive stacks globally. Here's the complete 2026 framework.

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Written by CA Durgesh Chavda

Chartered Accountant (ICAI) · Founder, Bharat Quantum Prospera · US incorporation, India-US DTAA, FEMA ODI, NRI taxation, cross-border structuring · LinkedIn

/ Overview of 14 PLI sectors

What's covered.

PLI schemes launched sector-wise 2020-2024. Each with separate budget, incentive rate, eligibility threshold, nodal ministry:

1. Mobile Phones + Specified Electronic Components: nodal MeitY. Incentive 4-6%. Beneficiaries: Foxconn, Pegatron, Wistron (now Tata), Samsung, Dixon, Lava.
2. Pharmaceuticals: nodal DoP. 5-10% incentive. KSMs (Key Starting Materials) + Drug Intermediates + APIs + Formulations.
3. Automobile + Auto Components: nodal MHI. 18% incentive on advanced products.
4. Solar PV Modules: nodal MNRE. 5-10% incentive. Fully integrated manufacturing (polysilicon to module).
5. Advanced Chemistry Cell (ACC) Battery: nodal DHI. Up to USD 2.5B subsidy over 5 years.
6. Electronic Semiconductor + Display: India Semiconductor Mission (ISM) — up to 50% capex subsidy under Modified SPECS + DLI.
7. Specialty Steel: nodal MoS. 4-12% incentive.
8. Textiles (MMF + Technical Textiles): nodal MoT. 4-24% incentive.
9. Food Processing: nodal MoFPI. 4-10% incentive.
10. Telecom + Networking Products: nodal DoT. 4-7% incentive.
11. White Goods (AC + LED): nodal DPIIT. 4-6% incentive.
12. Drones + Drone Components: nodal MoCA. 20% incentive for drone components.
13. IT Hardware (Laptop + Tablet + AIO PC + Server): nodal MeitY. 5% incentive.
14. Medical Devices: nodal DoP. 5% incentive.

Expanded sectors under consideration (2026): shipbuilding, chemicals, leather, toys.

/ Standard PLI structure

The common framework.

Base year: FY immediately preceding scheme announcement; manufacturer's sales in base year is baseline.
Incentive calculation: X% of incremental sales (over base year) achieved in scheme years.
Scheme period: typically 5 years from first year of production under scheme.
Investment threshold: sector-specific minimum capex (e.g., mobile phones: INR 150 crore medium / INR 1,000 crore large; semiconductors: much higher).
Sales threshold: minimum incremental sales targeted year-on-year.
Local value addition: percentage of value added in India must increase over scheme period.
Direct employment generation: specific threshold per sector.
Cash disbursement: quarterly or annual claim; disbursed via respective ministry.
Compliance: project monitoring agency (PwC / EY / Deloitte / KPMG empanelled) verifies claims.

/ Combined incentive stack for foreign manufacturer

The total value.

Section 115BAB (15% corporate tax): new manufacturing company incorporated post Oct 2019, commence production by extended date, pure manufacturing (no re-labelling/packing). Effective 17.16% (15% + surcharge + cess) vs standard 25% / 22% under 115BAA. See our 115BAB guide.
PLI cash incentive: 4-6% of incremental sales for 5 years.
Customs duty optimisation: PMP (Phased Manufacturing Programme) + specific inverted-duty structures favour local manufacturing.
State-level incentives: additional state-industrial-policy benefits (land subsidies, electricity rebates, SGST reimbursement). Varies by state — Gujarat, Tamil Nadu, Karnataka, Maharashtra most proactive.
SEZ benefits: if SEZ-based unit, additional Section 10AA deduction (but note: 115BAB forfeits 10AA).
CGST / IGST refund: for export-oriented manufacturers.
Modified SPECS / DLI (semiconductors): up to 50% capex subsidy for chip fabs under India Semiconductor Mission.

Total stack can equate to 15-30% capex subsidy + 5-7% operating subsidy equivalent — among the most generous globally.

/ Application + ongoing compliance workflow

The 2-year execution.

Sector-specific scheme guidelines review: eligibility, thresholds, investment commitment, local value add targets.
Indian subsidiary setup: WOS as foreign manufacturing arm. See WOS guide.
Section 115BAB opt-in: Form 10-ID with Indian ITR of first year.
Project proposal: capex plan + sales forecast + local value add trajectory + employment plan.
Application to nodal ministry: formal application with proposal + supporting documents.
Approval + Letter of Approval (LoA): nodal ministry issues LoA specifying thresholds + incentive rate.
Project execution: build facility, commence production, hit sales targets.
Base year audit: establish baseline sales.
Annual / quarterly claim: submit claim with sales + investment + employment data verified by project monitoring agency.
Disbursement: cash incentive paid by nodal ministry.
Ongoing compliance: annual reporting, local value add tracking, employment reporting, variance explanations.

Last updated: 2026-10-15.

/ Ready when you are

Foreign manufacturer evaluating India for production base?

PLI + 115BAB + state incentives = 15-30% capex + 5-7% opex subsidy stack. BQP end-to-end: sector + state + 115BAB + PLI application + ongoing compliance.

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FAQ

Common questions, answered.

What is India's PLI scheme?

Production-Linked Incentive - sector-specific schemes offering cash incentive to manufacturers for incremental production in India. Launched 2020-2024 across 14 strategic sectors (electronics, pharma, auto, solar, semiconductors, textiles, food processing, telecom, white goods, drones, IT hardware, medical devices, specialty steel, batteries). Incentive 4-6% (standard) to 10-18% (strategic) of incremental sales over base year, paid in cash over 5-year scheme period.

Can a foreign manufacturer apply for PLI?

Yes - via Indian subsidiary (WOS). Foreign parent incorporates Indian Pvt Ltd, meets sector-specific investment + sales thresholds, applies to respective nodal ministry (MeitY for electronics, DoP for pharma, MHI for auto, MNRE for solar, etc.). Approval via Letter of Approval (LoA) specifying thresholds + incentive rate. Co-ordinate PLI with Section 115BAB 15% corporate tax for maximum benefit stack.

Which PLI sectors are most attractive for foreign manufacturers in 2026?

Mobile phones (established scheme, major foreign players), semiconductors (India Semiconductor Mission 50% capex subsidy), ACC battery (USD 2.5B subsidy pool), auto components (18% incentive for advanced products), drone components (20%), IT hardware (laptop + tablet + server, 5%). Choose based on sector match + capex capacity + strategic India commitment horizon.

What's the combined incentive stack for foreign manufacturers in India?

Section 115BAB (15% corporate tax, effective 17.16%) + PLI cash incentive 4-6% of incremental sales + State-level incentives (land, electricity, SGST reimbursement) + Customs duty optimisation + Semiconductor-specific capex subsidy up to 50% under ISM. Total equates to 15-30% capex subsidy + 5-7% operating subsidy - among the most generous manufacturing incentive stacks globally.

How long does PLI application + approval take?

3-9 months typical from application to Letter of Approval (LoA). Then project execution (12-24 months) to commence production. First PLI disbursement in year 1 of production. 5-year scheme period from first production year. Total engagement window from application to final disbursement: 6-7 years.

Does BQP handle PLI applications for foreign manufacturers?

Yes - end-to-end: sector eligibility analysis, Indian subsidiary setup, Section 115BAB co-ordination, project proposal + financial model, application to nodal ministry, LoA negotiation, annual/quarterly claim submission with project monitoring agency verification, state-level incentive co-ordination, ongoing compliance. Co-ordinated with Indian regulatory counsel + state industrial development authority. WhatsApp +91 78018 87130.