Age of PLI and Indigenization: Can Indian Startups Rise to the Challenge?

PLI scheme India represents a transformative policy initiative aimed at boosting domestic manufacturing and advancing the vision of a self-reliant nation. As India stands at a pivotal moment in its economic journey, the twin goals of the PLI scheme and indigenization in India are driving structural change across 14 strategic sectors. One of its notable successes is in electronics, particularly mobile phone manufacturing, where exports surpassed $11 billion in FY2024.

Startup innovation in India is transforming the nation’s economic landscape, driving growth across sectors like fintech, health tech, and clean energy. With strong government support and investor interest, India’s entrepreneurial ecosystem is thriving.

"India’s manufacturing future lies in innovation-driven startups. With PLI and supportive policies, we can lead globally in EV and tech,” says Bhavish Aggarwal, Founder & CEO, Ola Electric

This implementation gap offers a compelling opportunity for Indian startups to manufacture solutions for complex supply chains and high-tech components. With their inherent agility, innovation, and digital-first approaches, startups can fill critical voids in local manufacturing and R&D. Whether in semiconductors, defence tech, or green energy, startups have the potential to accelerate indigenization and strengthen India’s global competitiveness. In the evolving landscape of the PLI scheme and Make in India startups could well be the catalysts for the next phase of industrial transformation.

India’s Strategic Push for Self-Reliance and Innovation

India is set to derive strategic benefits across prime segments. Furthermore, the Indian Government is taking a strategic initiative by offering the PLI scheme in solar manufacturing, the PLI scheme in textiles, and the PLI scheme in medical devices will assist in minimizing import dependence and increasing domestic production of electronics.

 Moreover, the India Semiconductor Mission aims to build a semiconductor ecosystem in India by attracting global players as well as enabling and empowering home-grown talent. In addition, the defense indigenization policy will enable manufacturers in India to be less dependent on foreign suppliers for defense equipment, creating a more secure environment as well as increasing the participation of home-grown suppliers in defense and other projects. Through the public policy of defense indigenization, the government is providing more opportunities for start-ups as well as MSMEs to be part of the innovation process within defense.

"Startups are agile and tech-savvy. With the right policy push like PLI, they can power India’s self-reliant manufacturing dream," says Kunal Bahl, Co-founder, Snapdeal & Titan Capital

The Indian EV startup ecosystem is thriving and gaining traction with advances in battery technology solutions, green mobility solutions, and government support. New start-ups will play a pivotal role in helping India achieve its clean energy goals and lower urban pollution. Taken together, these policies and ecosystems demonstrate India's commitment to building a resilient economy. With a focus on the Production Linked Incentive (PLI) framework across industries, India wants to position itself as a regional hub, a thought leader in advanced manufacturing and innovation.

Role of Indigenization in Indian Manufacturing

Indigenization plays a vital role in strengthening Indian manufacturing by reducing reliance on imports and promoting self-reliance. It complements the PLI scheme impact by encouraging local production, especially in critical areas like electronics, defense, and renewable energy. As a result, India is better positioned to build a resilient supply chain and boost its technological capabilities. Across PLI scheme sectors such as medical devices, textiles, and EVs, indigenization fosters innovation, supports MSMEs, and creates high-value jobs. This synergy between indigenization and government incentives enhances India's global competitiveness and accelerates its transition into a manufacturing powerhouse driven by local capabilities.

Also Read: Manufacturing drives industrial output growth to 5% in January

Startup Funding Challenges in the PLI Ecosystem

Despite the Indian government’s ambitious push through the PLI scheme across sectors, startups often face significant funding challenges within this ecosystem. While the PLI scheme for electronics, medical devices, and the PLI Scheme for EVs are designed to boost domestic manufacturing and reduce import dependency. In addition, many early-stage companies struggle to secure the upfront capital needed to meet eligibility criteria, such as minimum investment thresholds or scale of production. Indian defense startups are a key to the defense indigenization policy, often lack access to consistent venture funding and long-term credit, which are crucial for developing cutting-edge technologies. The funding gap limits their ability to participate fully in government tenders or collaborate with larger defense manufacturers. Bridging this gap will require more inclusive financial mechanisms, stronger industry-academia partnerships, and targeted startup support for future growth.

Future of Atmanirbhar Bharat Startups 

The future of Atmanirbhar Bharat startups is moving in a positive direction as India continues to build on the vision of economic independence through innovation and the development of local capabilities. At the heart of this transformation lies the production-linked incentive program, a policy to increase manufacturing and reduce reliance on imports. By providing financial incentives to key sectors, the government hopes to spur investment, create jobs, and improve the export outlook of the economy.

Moreover, the Indian startup ecosystem growth has been impressive in recent years, with increasing access to funding, supportive government policies, and rising investor confidence. However, to fully unlock the potential of Atmanirbhar Bharat startups, further steps are needed, such as easing regulatory bottlenecks, enhancing R&D support, and integrating startups more deeply into public procurement and global value chains.

In this evolving landscape, startups are not just participants but leaders of India's journey toward sustainable and inclusive economic growth, making the vision of a self-reliant India both realistic and achievable.

FAQ

How does the PLI scheme support Indian startups in manufacturing and technology?

It offers financial incentives, boosts local production, encourages innovation, and strengthens supply chains in tech sectors.

What challenges do Indian startups face in leveraging PLI and indigenization policies?

Startups struggle with high entry barriers, limited capital, complex compliance, and meeting large-scale production targets.

Which sectors offer the biggest opportunities for startups under the PLI scheme?

Electronics, telecom, medical devices, drones, automotive, and renewable energy offer high growth under PLI schemes.