Budget 2025’s PLI Boost: The Winners, the Losers, and What Lies Ahead

Did you miss the latest buzz on the PLI scheme in Budget 2025? You’re not alone. In her 8th budget presentation, FM Nirmala Sitharaman made some bold moves—one of the biggest being a massive ₹19,500 crore allocation for the Production-Linked Incentive (PLI) scheme, a staggering 76% jump from last year.

But here’s the twist—this windfall isn’t evenly spread. While sectors like electronics, semiconductors, and green energy are cashing in, others, like automobiles, are seeing cuts. So, who benefits, who loses, and what does this mean for manufacturers and investors? Let’s break it down.

What is the Production Linked Incentive Scheme?

Launched by Prime Minister Narendra Modi on 11th November 2020, the Production-Linked Incentive (PLI) scheme is a strategic effort to position India as a global manufacturing hub. The objective? Strengthen domestic production while reducing reliance on imports.

The concept is simple—manufacturing more in India earns more incentives. Businesses that ramp up local production get financial rewards, making it a game-changer for industries looking to scale.

So far, the PLI scheme has done a good job of attracting foreign investments, boosting local production, and creating countless jobs. The PLI scheme initially targeted 14 key sectors, including electronics, pharmaceuticals, automobiles, textiles, and renewable energy.

In the Union Budget for FY2025-2026, the government has increased funding for the PLI scheme, but not all sectors are getting the same share. While some industries have received a bigger boost, others have seen reductions. Let’s take a closer look.

PLI Outlay Up 76%: Which Sectors Gained and Which Lost?

The ₹19,500 crore allocation for the PLI scheme FY2025-26 marks a 76% increase from the previous year’s outlay. However, this increase is not evenly distributed across sectors. The government has strategically prioritised industries that align with global trends, technological advancements, and India’s long-term economic goals.

• Textiles: Biggest PLI Winner

Surprisingly, the budgetary support for the textiles sector has skyrocketed by 25 times, jumping from ₹45 crore in FY25 (revised estimates, or RE) to ₹1,148 crore in FY26 (budget estimates, or BE). This marks a dramatic rise compared to the actual expenditure of just ₹4 crore in FY24. As a major employment generator and export driver, the textile sector stands to benefit significantly from this increased allocation, especially under the PLI scheme. The sharp rise in funding underscores the government’s push to modernise operations, expand high-value segments like technical textiles, and strengthen India’s global foothold. This investment is set to drive advanced machinery adoption, boost R&D, and promote sustainable manufacturing. If executed well, these measures could enhance India’s competitiveness against global leaders like China and Bangladesh, fostering a more resilient and future-ready industry.

• Steel: Forging Self-Reliance

The sixfold increase in budgetary allocation for the speciality steel sector—from ₹55 crore in FY25 (RE) to ₹305 crore in FY26 (BE)—signals a strong push for domestic production, supply chain resilience, and reduced import dependence. Essential for infrastructure, automotive, and defence, this boost will accelerate high-grade steel manufacturing, driving self-reliance and global competitiveness. Expanding capacity and advancing technology aligns with Atmanirbhar Bharat, strengthening India’s position in the global speciality steel market while supporting major infrastructure and defence projects.

• Pharma: Boosting API Independence

The pharmaceutical sector’s budget has risen by 14% to ₹2,444.9 crore in FY26 (BE), reinforcing the push for domestic API production and supply chain resilience. Reducing dependence on imports, particularly from China, strengthens India’s position as the “pharmacy of the world” while driving R&D, innovation, and global competitiveness. The increased funding is set to accelerate growth, ensuring a more self-reliant and sustainable sector.

• Electronics: Powering a Tech Hub

The electronics manufacturing and IT hardware sector, the largest beneficiary under the PLI scheme, has received a significant 56% budgetary increase—from ₹5,777 crore in FY25 (RE) to ₹9,000 crore in FY26 (BE). This reflects the government’s strategic push to reduce import dependency and establish India as a global electronics manufacturing hub. The increased allocation is expected to drive investments in semiconductor fabrication, display manufacturing, and IT hardware production, strengthening domestic capabilities. With global giants like Intel, TSMC, and Samsung eyeing India’s market, this move could enhance India’s role in the global supply chain, positioning it as a competitive alternative to China and Taiwan.

• Auto and Batteries: Facing Cuts

While several industries have benefited from the increased PLI outlay, the automobile and auto components sector, along with Advanced Chemistry Cell (ACC) battery storage, finds itself on the losing side.

The government’s budget allocation for the automobile sector has been cut from ₹3,500 crore in FY25 to ₹2,819 crore in FY26, signalling a shift in priorities. These cuts indicate a recalibration of government focus, potentially slowing down advancements in EV infrastructure and domestic auto manufacturing.

Similarly, the ACC battery storage sector has seen a sharp 37.7% reduction in PLI allocation, dropping from ₹250 crore in Budget 2024 to ₹155.76 crore in Budget 2025. This cut could slow domestic battery manufacturing, impacting EV adoption and renewable energy growth. While it may signal a push for private investment or alternative incentives, the sector must pivot towards innovation and strategic partnerships to maintain competitiveness in the global market.

• Toys and Footwear: Left Out, Not Forgotten

Besides, two sectors—toys and footwear—did not receive any budgetary allocation in the Union Budget 2025-26. This omission suggests a strategic shift in government priorities, likely focusing on sectors with higher immediate growth potential.

However, this does not mean these industries are being overlooked. The government has announced a new scheme to make India a global toy manufacturing hub, which could drive investments and infrastructure development outside the PLI framework. Similarly, the footwear sector may continue benefiting from existing initiatives like the Make in India programme and other export-linked incentives.

Impact on India’s Manufacturing Ecosystem and Investors

Industries like electronics, semiconductors, green energy, textiles, and battery storage are the biggest winners, benefiting from higher incentives to scale production and boost exports. On the other hand, sectors like automobiles have seen cuts, prompting companies to reassess strategies.

For manufacturers, this shift means re-aligning investments to stay competitive in priority sectors. For investors, the focus should be on industries receiving higher allocations, as they are poised for growth and policy support. Companies in high-incentive sectors could see improved profitability and expansion, making them attractive investment opportunities in the evolving Indian manufacturing landscape.

Conclusion

The 76% jump in the PLI scheme outlay for FY26 is a bold and strategic move by the Indian government. The PLI scheme focuses on sectors with high growth potential and global relevance. It aims to transform India’s manufacturing industry to the next level and address challenges like India’s import dependency and sustainability. The PLI scheme’s success will depend on how it is implemented. This means the government must ensure transparency, timely disbursement of incentives, and a conducive policy environment to foster innovation and attract investments.