The central government’s production-linked incentive schemes have successfully mobilized significant capital and boosted manufacturing output, yet they have fallen short of employment goals, according to a NITI Aayog impact assessment report released on Thursday. The evaluation, conducted with the Indian Institute of Management Ahmedabad, indicates the schemes attracted Rs 2.4 lakh crore in investments across 14 sectors, generating Rs 22.66 lakh crore in production and sales by March 2026. Despite these financial successes, the report notes that employment generation has reached only 28% of the full-tenure target of 30.18 lakh jobs.
The assessment highlights a structural disparity in how incentives have been absorbed. While investment achievement stood at 76% and production at 64%, the report cautioned that higher capital expenditure does not automatically translate into proportional job creation, particularly in sectors with high automation. "However, outcomes have been uneven across sectors," the document states, pointing to varied implementation paces and differing technological requirements.
Specific sectors showed distinct patterns. Electronics manufacturing recorded Rs 20,580 crore in investment and created 1.69 lakh jobs, while food processing attracted over Rs 9,200 crore and employed 3.29 lakh people, driven by large firms. In contrast, the textiles sector attracted Rs 8,117 crore but created only 33,427 jobs. The report attributed this lag partly to initial eligibility conditions difficult for micro, small, and medium enterprises to meet, suggesting that subsequent changes could improve future performance.
Ashok Kumar Lahiri, Vice Chairman of NITI Aayog, emphasized the necessity of building manufacturing capabilities for India to become a competitive global destination. "It is not an option, it is a compulsion, it is a must," Lahiri stated, according to ThePrint. The report recommended addressing sector-specific bottlenecks, improving workforce skills, and aligning manufacturing capacity with market demand. It also called for stronger domestic procurement policies and better coordination between central and state governments to resolve regulatory hurdles.
The assessment noted that nearly 70% of targeted segments are broadly on track, with electronics, telecom, and pharmaceuticals showing strong results. The pharmaceutical sector has established domestic capacity for critical active ingredients, reducing import dependence. However, the report flagged gaps in data reporting, particularly regarding exports and employment, which hinder a complete evaluation of the schemes' impact. It urged ministries to adopt standardized reporting to ensure initial investments translate into sustained production and job creation.