Gujarat, Karnataka and Tamil Nadu to get lion’s share of PLI investments: Report

The Production Linked Incentive (PLI) Scheme that the Union government is expanding rapidly to boost local manufacturing is set to benefit three states more than others. A detailed analysis of the scheme spread over nine major sectors, out of 14, shows that Gujarat, Karnataka and Tamil Nadu would be the key beneficiaries.

As per a research report from CRISIL Market Intelligence and Analysis (MI&A), the nine major sectors under the PLI Scheme—ACC Battery, Solar PV, Textiles, Mobiles, Food Processing, Telecom, White Goods, IT Hardware and Medical Devices—are expected to attract investments worth Rs 1.28 lakh crore. Out of these, Tamil Nadu is expected to get a third of the investments, i.e., over Rs 42,000 crore. While Gujarat is expected to bag private capex of close to Rs 36,000 crore or 28 per cent of the amount. Karnataka that have already attracted investments from global electronics manufacturers like Wistron, is expected to get 11 per cent or Rs 14,000 crore. While all other Indian states - some 25 in total - would together get only 28 per cent or Rs 36,000 crore worth of investments from these 9 sectoral PLIs.

Out of these nine sectors, ACC Battery is the largest in terms of investment potentials—with Rs 52,000 crore worth of investments expected. In this sectoral PLI, Tamil Nadu is expected to get a whopping 67 per cent of the total capex, close to Rs 35,000 crore, while Karnataka and Gujarat would get 17 per cent (Rs 9,000 crore) each.

Another major PLI—Solar PV—is expected to attract total capex of Rs 32,000 crore. Here Gujarat has emerged the potential winner, bagging 76 per cent (over Rs 24,000 crore) of the investments, while the rest 24 per cent is expected to go to Andhra Pradesh. In other key sectoral PLIs like textile and mobile handsets, states like Tamil Nadu, Gujarat, Madhya Pradesh, Maharashtra and Uttar Pradesh are expected get the lion’s share.

According to Hetal Gandhi, Director–Research at CRISIL MI&A, in spite of a slow start the PLI scheme has started to show results, albeit in some sectors like mobile handsets and pharmaceuticals.

“The scheme was introduced in 2020-21 and, ideally, it should have peaked by now and achieved its purpose by 2025-26. However, large ticket industries are either yet to adopt the scheme or begin major activities under it. PLI is surely lagging behind its targets. We now estimate that the peak incentive payout would take place only in 2026-27 and PLI would continue at least till 2028-29,” she says.