In FY2022, the Government of India (GoI) had announced the Production-Linked Incentive (PLI) scheme and subsequently the Design-Linked Incentive (DLI) scheme (to be called ‘incentive-linked’ schemes in the report henceforth) to boost manufacturing and exports, reduce imports, attract investments and technology, and to make Indian manufacturers globally competitive. While the PLI scheme is broadly meeting its objectives in terms of incentivising private sector investments, several sectors are behind the curve in respect of the desired investment timelines, with progress varying by sectors. ICRA estimates that an aggregate capital expenditure (capex) of Rs. 2.3 trillion was incurred by the private sector by March 2026 from the time the scheme started in FY2022 (which is 55-60% of the total expected capex outlay of Rs. 4 trillion). Against this, only 20% of the total incentive outlay (i.e. ~20% of Rs. 3 trillion) was disbursed or had become eligible to be disbursed by the end of FY2026. Companies will become eligible to receive the balance incentives as and when incremental production/sales are achieved over time.

• Of the total expected capex (GoI’s estimates in FY2022 at scheme launch) of close to Rs. 4.0 trillion to be incurred by corporates under the incentive-linked scheme, ~Rs. 2.2 trillion had been invested as of December 2025. ICRA projects Rs. 2.3 trillion of aggregate capex to be incurred by March 2027, which is 55-60% of the total estimated capex for the scheme.
• Incentives under most of the sectors are linked to incremental sales/production.
• The current capex deployment has led to incremental sales of around Rs. 20.4 trillion (as of December 2025).