Introduction
The Production-Linked Incentive (PLI) Scheme is a flagship initiative by the Government of India aimed at boosting domestic manufacturing, increasing exports, and reducing dependency on imports. While the primary focus of the PLI scheme is on manufacturing, its indirect impact on eCommerce and Direct-to-Consumer (D2C) brands has been significant.
With a growing preference for Made in India products and increasing digital adoption, the PLI scheme is shaping the future of Indian eCommerce and D2C brands. This blog explores the impact of the PLI scheme on these sectors, along with key data trends, analysis, government initiatives, future prospects, and the pros and cons of this policy.
Overview of the PLI Scheme
The PLI scheme, launched in 2020, aims to:
- Encourage domestic production by offering incentives to manufacturers.
- Boost employment generation in key sectors.
- Enhance global competitiveness of Indian brands.
- Reduce dependency on imports, especially from China.
Key Sectors Under PLI
The scheme covers 14 key sectors, including:
- Electronics & IT Hardware
- Pharmaceuticals
- Automobiles & Auto Components
- White Goods (ACs & LEDs)
- Textiles & Apparel
- Food Processing
- Specialty Steel
- Telecom & Networking Equipment
- Solar PV Modules
- Drones & Drone Components
Total Outlay: ₹1.97 lakh crore ($26 billion) over five years
Impact on eCommerce & D2C Brands: Data & Trends
1. Growth in Made-in-India Brands
- Over 400+ D2C brands have emerged in India, thanks to increasing local manufacturing support.
- More than 60% of online shoppers prefer to buy locally made products.
- The market size for D2C brands in India is expected to reach $100 billion by 2025.
2. Expansion of MSMEs in eCommerce
- The PLI scheme has enabled over 50,000 MSMEs to scale production and integrate with eCommerce platforms like Amazon, Flipkart, and Myntra.
- UPI and digital payment penetration have grown by 200% in Tier 2 and Tier 3 cities, boosting local D2C brand sales.
3. Electronics & IT Hardware Growth
- Smartphone production in India has doubled since the PLI scheme, reducing import dependency.
- Major brands like Apple, Samsung, and Xiaomi now manufacture a significant portion of their devices in India, benefiting online retailers.
4. Boost to Apparel & Textile eCommerce
- PLI incentives worth ₹10,683 crore have been allocated for textiles, supporting local D2C fashion brands.
- Online fashion and apparel sales saw 30% YoY growth due to increased local production.
5. Rise in Sustainable & Homegrown Brands
- PLI has encouraged sustainable production, leading to the rise of eco-friendly and homegrown brands.
- Ayurvedic, organic, and handmade products have seen a 40% increase in sales on eCommerce platforms.
Analysis: How PLI is Reshaping the eCommerce & D2C Ecosystem
1. Strengthening Local Supply Chains
- Reduced reliance on imports has led to faster production cycles and better inventory management.
- Domestic supply chain efficiencies are helping D2C brands lower their costs.
2. Enhanced Product Innovation & Customization
- Indian brands now have the freedom to innovate, leading to personalized and niche product offerings.
- Customization based on regional preferences has increased customer loyalty.
3. Increased Global Export Opportunities
- Government support for export-oriented manufacturing is allowing eCommerce brands to expand globally.
- The India-EU and India-US trade agreements are expected to boost exports for Indian D2C brands.
4. Job Creation & Economic Growth
- PLI-linked industries have created over 2 million new jobs in manufacturing and related sectors.
- A strong manufacturing base supports a circular economy that benefits logistics, warehousing, and retail sectors.
Future Initiatives & Upcoming Programs
1. Expansion of PLI for More Sectors
- Government may extend the scheme to include toys, handicrafts, and electric vehicles (EVs), further supporting eCommerce growth.
- PLI 2.0 is expected to introduce incentives for AI and automation-driven manufacturing.
2. Strengthening MSME & Startup Ecosystem
- More funding and subsidies for startups in food processing, fashion, and electronics.
- Special support for women-led D2C brands.
3. Digital & AI Integration in Manufacturing
- Encouragement for AI-powered predictive analytics and blockchain supply chains.
- Robotics and automation to be integrated into Indian factories, improving efficiency.
4. Enhancing Cross-Border eCommerce
- The government plans to simplify export policies for small sellers.
- Indian brands will get easier access to global eCommerce platforms like Amazon Global Selling and Shopify.
Pros & Cons of PLI Scheme for eCommerce & D2C Brands
Pros:
✅ Boosts Local Manufacturing – Reduces import dependency and enhances product availability.
✅ Encourages ‘Made in India’ Brands – Helps local D2C brands compete with global giants.
✅ Supports MSMEs & Startups – Provides financial incentives to emerging businesses.
✅ Fosters Export Growth – Strengthens India’s position in global eCommerce markets.
✅ Enhances Job Creation – Generates employment opportunities across sectors.
✅ Improves Quality & Innovation – Leads to better and more customized products for consumers.
Cons:
❌ High Compliance & Regulatory Burden – Many startups struggle with government documentation.
❌ Limited Awareness Among Small Businesses – Not all MSMEs know how to benefit from PLI incentives.
❌ Infrastructure & Logistics Bottlenecks – Some regions still lack the required logistics support.
❌ Slow Disbursement of Incentives – Businesses sometimes face delays in receiving promised incentives.
The PLI scheme has become a game-changer for Indian eCommerce and D2C brands, fueling domestic production, reducing import dependency, and expanding local businesses. With rising consumer preference for homegrown brands, this initiative is set to strengthen India’s digital economy.
However, challenges like compliance burdens and logistics infrastructure still need to be addressed. With continued government support, PLI-backed businesses are expected to dominate the Indian eCommerce market, contributing to the country’s goal of becoming a global manufacturing hub.
Get Dedicated Account manager for Your Store
Call-7398422072