Why the PLI Scheme Matters to You as an NRI Investor
The Production Linked Incentive (PLI) scheme launched in 2020 represents one of the largest coordinated pushes India has ever made to become a global manufacturing powerhouse. With a total government outlay of ₹1.91 lakh crore spread across 14 strategic sectors, the scheme rewards companies that manufacture in India and demonstrate incremental production growth year over year. If you live abroad and want to put capital to work in India's manufacturing story, this scheme sits right at the center of that opportunity.
The government calculates incentives based on incremental sales over a base year, so companies that scale production and exports earn performance linked financial rewards. This design means the scheme favors serious, growth oriented manufacturers rather than passive participants. Importantly, NRIs and Overseas Citizens of India (OCIs) face no explicit restrictions on participation. You can invest directly through Indian companies, partner with approved manufacturers, or invest in listed PLI beneficiary companies through portfolio routes.
The Numbers So Far (As of 31 December 2025)
The scheme has built serious momentum:
- 836 applications approved across all 14 sectors
- ₹2.16 lakh crore in cumulative investments
- ₹20.41 lakh crore in total sales generated
- ₹8.3 lakh crore in exports
- Over 14.39 lakh direct and indirect jobs created
- ₹28,748 crore in incentives already disbursed to qualifying companies
The 14 Sectors and What Stands Out for Investors
Electronics and IT Hardware
Domestic manufacturing capacity has expanded significantly, with companies moving beyond simple assembly into advanced sub assemblies like printed circuit boards, batteries, camera modules, and enclosures. This deepening of the value chain means Indian electronics manufacturers now capture more margin per unit, which directly benefits their earnings and stock valuations. The mobile phone PLI has been particularly successful, turning India into a net exporter of electronics.Solar PV Modules: A Deep Dive
The Solar PV PLI programme deserves special attention because of its scale, its strategic importance to India's energy transition, and the detailed structure the Ministry of New and Renewable Energy (MNRE) has put in place.
Total outlay: ₹24,000 crore across two tranches.
Core objective: Build an ecosystem for manufacturing high efficiency solar PV modules in India, reduce import dependence in renewable energy, bring cutting edge technology into the country, promote integrated manufacturing plants for better quality control and competitiveness, develop local material sourcing, and generate employment.
The scheme is technology agnostic, meaning it allows all solar PV technologies. However, technologies that yield better module performance receive higher incentives. This design rewards innovation and efficiency rather than locking manufacturers into a single technology path.
#### Tranche I
- Cabinet approval: 7 April 2021
- Scheme guidelines issued: 28 April 2021
- Outlay: ₹4,500 crore
- Implementing agency: Indian Renewable Energy Development Agency Limited (IREDA) on behalf of MNRE
- Selection process: Transparent bidding through bid documents issued by IREDA
- Result: Letters of Award issued in November and December 2021 to three successful bidders for setting up 8,737 MW of fully integrated solar PV module manufacturing capacity
- Incentive period: Five years post commissioning, linked to manufacture and sale of high efficiency solar PV modules
- Cabinet approval: 21 September 2022
- Scheme guidelines issued: 30 September 2022
- Outlay: ₹19,500 crore
- Implementing agency: Solar Energy Corporation of India (SECI) on behalf of MNRE
- Selection process: Tender document issued by SECI for selection of solar PV manufacturers
- Result: Letters of Award issued in April 2023 to 11 bidders for setting up 39,600 MW of fully or partially integrated solar PV module manufacturing capacity
#### What This Means for NRI Investors
The solar PV PLI programme creates investment opportunities at multiple levels:
1. Direct equity in PLI beneficiary companies: Several of the 14 companies that received Letters of Award are listed or have listed parent entities. Their earnings will benefit directly from PLI disbursements over the five year incentive period post commissioning. Look at their capex timelines, commissioning schedules, and module technology choices when evaluating them.
2. Supply chain plays: As integrated manufacturing scales up, demand grows for raw materials (polysilicon, silver paste, glass), equipment, and ancillary services. Companies supplying these inputs to PLI beneficiaries stand to gain.
3. InvITs and renewable energy funds: Some infrastructure investment trusts and mutual fund schemes focused on renewable energy will hold exposure to solar manufacturing and solar power generation assets that benefit from domestically manufactured modules.
4. Long runway: India's massive renewable energy targets ensure sustained demand for solar modules well beyond the PLI incentive period. Companies that build manufacturing capacity now position themselves for decades of domestic and export demand.
The scheme's emphasis on integrated plants (covering the full chain from ingots and wafers to cells and modules) means that companies achieving full integration will enjoy structural cost advantages and higher margins compared to those doing only partial assembly. When evaluating listed PLI beneficiaries, check whether they hold fully integrated or partially integrated awards, as this distinction affects their long term competitiveness.
Automobiles and Advanced Automotive Technology (Including EVs)
This sector reported ₹32,879 crore in sales during FY 2025 to 2026. Investments flow into electric mobility, power electronics, and safety systems. The EV transition creates entirely new supply chains, and PLI incentives make India a competitive location for building them.Semiconductors and Electronics Manufacturing
The Union Budget 2026-27 launched ISM 2.0 (Semicon India Scheme 2.0) for semiconductors, emphasizing equipment and materials, full stack design, IP development, and supply chain resilience. The Semicon India Programme has secured ₹1.6 trillion (approximately USD 17.31 billion) in commitments with 10 units approved (2 fabs and 8 ATMP/OSAT facilities), with 1 in commercial production and 3 in pilot by March 2026. Fiscal incentives include interest subsidies, employee expense reimbursements, and 10 year SGST exemptions under the Eligible Manufacturer Importers scheme (April 1, 2026 to March 31, 2028).Pharmaceuticals and Medical Devices
The scheme supports robust growth in bulk drugs and medical devices, strengthening India's position as the "pharmacy of the world." The sector continues to attract significant investments and technology upgrades.Telecom and Networking Products
Focus areas include domestic manufacturing of core telecom equipment, reducing reliance on imports for critical communications infrastructure.White Goods (ACs and LEDs)
The scheme emphasizes component manufacturing like compressors and LED drivers, with a target of 75 to 80 percent domestic value addition by 2028 to 2029. Companies that achieve this level of localization will enjoy significant cost advantages.Food Processing
This sector attracted ₹9,200 crore in investments along with technology upgrades in processing and packaging.Textiles (MMF and Technical Textiles)
The scheme promotes high value man made fibre and technical textiles, integrated with PM MITRA Parks for scale and logistics advantages. Recent relaxations make this sector significantly more accessible (details below).Other covered sectors include steel, specialty steel, advanced chemistry cell batteries, and drones.
Textiles PLI: Extended Registration Window and Significantly Relaxed Thresholds
The government extended the registration window for the textiles PLI scheme through amendments notified on 9 October 2025, with new applications accepted until 31 March 2026. If you have been considering a manufacturing investment in textiles, this extension gives you a concrete entry window with substantially improved terms.
Key Relaxations Effective from FY 2025-26
Investment Thresholds (Halved):
- Part 1 (large investments): Minimum investment threshold halved to ₹1.5 billion (excluding land and buildings)
- Part 2 (medium investments): Minimum investment threshold halved to ₹500 million (excluding land and buildings)
- Incremental turnover requirement: Reduced to 10 percent year on year from Year 2 onward, down from the earlier 25 percent requirement
- 17 new products added in MMF apparel and fabrics, broadening the scope of eligible products
- No requirement to set up new entities: Existing companies can now apply without forming separate companies, making it easier for established manufacturers and investors to participate
Incentive Structure and Timeline
Incentives run for 5 to 6 years after commencement of production, tied to turnover from notified products. Incentive disbursement begins from FY 2026-27 for production achieved in FY 2025-26 and onwards. Applications go through the PLI portal at pli.texmin.gov.in, where you register, submit forms, upload documents (PAN, GST, and others), and undergo a Project Management Agency review before approval and eventual disbursement.
Early Response to Amendments
Following the October 2025 amendments, the government received 84 new proposals projecting:
- ₹10,789 crore in planned investments
- ₹44,081 crore in projected turnover
- 86,740 new jobs expected to be created
How NRIs Can Participate: FDI Routes and Eligibility
NRIs and OCIs face no explicit restrictions on PLI scheme participation. The schemes are open to industry participants who manufacture in India, meet threshold investment and production requirements, and demonstrate incremental growth. As an NRI or OCI, you access these schemes through the broader FDI policy framework.
For the Solar PV PLI specifically, manufacturers go through a transparent selection process (bidding through IREDA for Tranche I or SECI for Tranche II). The selection criteria focus on manufacturing capability, technology, and pricing rather than the nationality of the investor. This means an NRI backed Indian company that meets the technical and financial criteria can participate on the same footing as any domestic manufacturer.
FDI Caps and Automatic Route Access
Here is how the FDI landscape maps to PLI sectors:
| Sector | FDI Cap (Automatic Route) | Notes | |---|---|---| | Electronics and IT Hardware | 100% | Automatic route | | Solar PV Modules | 100% | Automatic route | | Semiconductors | 100% | Automatic route | | Greenfield Pharmaceuticals | 100% | Automatic route | | Brownfield Pharmaceuticals | 74% | Beyond 74% requires government approval | | Automobiles and EVs | 100% | Automatic route | | Textiles Manufacturing | 100% | Automatic route | | Telecom | Check latest DPIIT notification | Sector specific conditions may apply | | Food Processing | 100% in most categories | Some categories have conditions | | White Goods | 100% | Automatic route | | Steel and Specialty Steel | 100% | Automatic route | | Advanced Chemistry Cell Batteries | 100% | Automatic route | | Drones | 100% | Automatic route |
Practical Participation Pathways
1. Wholly owned subsidiary: You set up an Indian company with 100 percent foreign ownership (where the automatic route permits) and apply for PLI approval through that entity. For solar PV, this entity would bid through the relevant implementing agency (IREDA or SECI depending on the tranche). You can form an LLP, private limited company, or public limited company under the Companies Act 2013.
2. Joint venture: You partner with an Indian promoter and invest through a JV structure. This works well in sectors where you want local operational expertise. In solar PV manufacturing, partnering with a company that already has module or cell manufacturing experience can strengthen your bid.
3. Portfolio investment in listed PLI beneficiaries: If direct manufacturing feels too hands on, you can invest through the Portfolio Investment Scheme (PIS) in listed Indian companies that have received PLI approvals. Many large cap and mid cap manufacturers across electronics, pharma, auto, solar, and textiles participate in PLI schemes, and their earnings benefit directly from incentive disbursements. You can hold shares through NRE or NRO accounts.
4. Mutual funds and ETFs with manufacturing exposure: Several Indian mutual fund schemes and ETFs focus on manufacturing, infrastructure, or specific sectors like energy and auto. These provide diversified exposure to PLI beneficiary companies without requiring you to pick individual stocks.
5. Liberalised Remission Scheme (LRS) for equity investments: NRIs can invest up to USD 250,000 per financial year in Indian equities without RBI approval, using the LRS route. This covers investments in listed PLI beneficiary companies and can be tracked via Form A3.
FEMA Compliance Essentials
All investments must comply with FEMA regulations. Repatriation of profits and incentive income is allowed after applicable Indian taxes. Key compliance points:
- Fund routing: Ensure all foreign remittances are routed through authorized dealer banks
- Documentation: Maintain records of the source of funds and investment instruments
- Repatriation: Profits earned by your Indian company can be repatriated to your overseas account, subject to withholding tax (typically 20 percent for dividends, subject to tax treaty benefits)
- PAN requirement: A valid Indian Permanent Account Number is mandatory for all investments
- NPA and willful defaulter status: Ensure your company and promoters have no history of non-performing assets or willful default
Tax and Regulatory Considerations for NRI Investors
Income Tax on PLI Incentives
PLI incentives received by your Indian company are treated as business income and taxed under the normal corporate tax regime. The incentive amount is added to your company's gross income. If your company qualifies for any tax holiday or exemption under specific provisions, you may claim relief. Consult a tax advisor to understand your liability based on your company's profit levels and applicable tax rates.
Withholding Tax on Repatriation
When you repatriate profits earned by your Indian company to your overseas account, the company must withhold tax at the applicable rate (typically 20 percent for dividends, subject to tax treaty benefits if your country has a tax treaty with India). Ensure your company files Form 15CA/15CB with the tax authority before remitting funds abroad.
GST Compliance
Your Indian manufacturing entity must register for GST and file returns regularly. PLI incentives may have specific GST treatment depending on the sector and the nature of the incentive disbursement.
Investment and Market Impact: Why This Matters for Your Portfolio
The PLI scheme reshapes the earnings trajectory of Indian manufacturers in very tangible ways:
Direct earnings boost: Companies that qualify receive cash incentives on incremental sales. For a mid cap electronics manufacturer or a solar PV module maker, PLI disbursements directly improve cash flow and profitability over the incentive period.
Margin expansion: The incentive income flows to the bottom line, boosting net profit margins and return on equity. This translates into higher earnings per share for listed companies, which typically drives stock price appreciation.
Capital expenditure visibility: PLI beneficiaries often announce aggressive capex plans because the incentive structure makes expansion economically attractive. This capex creates demand for equipment suppliers, construction companies, and logistics providers.
Export competitiveness: The scheme is explicitly designed to make Indian manufacturers globally competitive. Companies that scale under PLI and capture export markets see revenue diversification and reduced dependence on domestic demand cycles.
Supply chain deepening: As integrated manufacturing scales up (particularly in solar, electronics, and semiconductors), demand grows for raw materials, components, equipment, and ancillary services. Companies supplying these inputs to PLI beneficiaries stand to gain.
Listed Companies to Watch
Several Indian listed companies operate across PLI sectors. Companies that have applied for or received PLI approval effectively receive a production subsidy that improves margins and accelerates capacity expansion. When evaluating stocks, look for:
- PLI approval status: Check whether the company holds a Letter of Award or has been approved under the scheme
- Capex timelines: Understand when the company plans to commission capacity and when incentive disbursements will begin
- Technology choices: In solar PV, check whether the company holds fully integrated or partially integrated awards, as this affects long term competitiveness
- Export orientation: Companies with strong export pipelines benefit more from PLI incentives because the scheme rewards incremental sales
Indirect Investment Opportunities
Even if you do not invest directly in PLI beneficiaries, the scheme creates opportunities across the supply chain:
- Raw material suppliers: Companies supplying polysilicon, silver paste, glass, chemicals, and other inputs to PLI manufacturers
- Equipment suppliers: Machinery and equipment manufacturers serving PLI beneficiaries
- Logistics and warehousing: Industrial warehousing has hit record absorption with 72 million square feet in the latest year (55 percent year on year growth), led by Pune (16 million square feet, 86 percent growth) and Chennai, driven partly by manufacturing expansion under PLI
- Infrastructure investment trusts (InvITs): Some InvITs hold exposure to manufacturing facilities and renewable energy assets that benefit from PLI driven growth
Key Dates and Action Items for NRI Investors
| Event | Date | |---|---| | PLI Scheme launched | 2020 | | Solar PV Tranche I Cabinet approval | 7 April 2021 | | Solar PV Tranche I Letters of Award issued | November and December 2021 | | Solar PV Tranche II Cabinet approval | 21 September 2022 | | Solar PV Tranche II Letters of Award issued | April 2023 | | Textiles PLI amendments notified | 9 October 2025 | | Textiles PLI portal reopened | 1 August 2025 | | Textiles PLI application deadline | 31 March 2026 | | Data snapshot (all sectors) | 31 December 2025 | | Union Budget 2026-27 (ISM 2.0 launch) | February 2026 |
Getting Started: Practical Next Steps
1. Identify your investment thesis: Decide whether you want to invest directly in manufacturing (through a subsidiary or JV) or indirectly through listed companies and mutual funds.
2. Verify sector specific rules: Check the latest DPIIT consolidated FDI policy and sector specific notifications for current FDI caps, minimum investment thresholds, and eligibility criteria.
3. Consult professionals: Engage a Chartered Accountant familiar with FEMA and PLI compliance, and a legal advisor experienced in Indian corporate law and FDI.
4. Set up banking infrastructure: If investing directly, establish NRE or FCNR accounts with authorized dealer banks to route funds and manage repatriation.
5. Track PLI beneficiaries: If investing through listed companies, monitor PLI approval announcements, capex timelines, and incentive disbursement schedules through company disclosures and regulatory filings.
6. Monitor policy updates: PLI schemes continue to evolve. Subscribe to DPIIT, ministry specific notifications, and stock exchange announcements to stay informed of changes that affect your investments.
The PLI scheme represents a structural shift in India's manufacturing landscape. For NRI investors, it offers both direct participation opportunities and powerful tailwinds for equity investments across multiple sectors. The combination of government support, improving manufacturing competitiveness, and growing export orientation makes this an attractive area to deploy capital over the medium to long term.