The PLI scheme for Large Scale Electronics Manufacturing rolled out during the COVID year, when industrial output was disrupted and global supply chains were in disarray. Samsung was among the few companies that sustained operations through the lockdown and met production targets under those conditions. When the Ministry of Finance subsequently modified scheme parameters mid-cycle and its ₹900 crore incentive claim was held, Samsung stayed, expanded, and became one of India's largest smartphone exporters. What does Samsung's journey reveal about the institutional thinking within the Ministry of Finance and MeitY, and how does industrial policy actually operate in India when the government and its most consequential beneficiary are not in the same conversation?
Samsung's PLI trajectory is the clearest illustration in India's recent industrial policy of what happens when a company and a scheme grow up together, through friction, modification, and mutual adaptation. Samsung's ₹900 crore claim was subsequently reduced to approximately ₹500 crore after MeitY identified invoicing discrepancies. The company that had performed during the hardest year discovered that the scheme's terms could be re-authored to accommodate those who had not.
The PLI for Large Scale Electronics Manufacturing was India's first major production-linked incentive programme, notified with a fiscal outlay designed to offset India's 10 to 12% cost disability relative to China. Five global companies qualified initially for the Mobile Phones (Invoice Value ₹15,000 and above) segment: Samsung, Foxconn Hon Hai, Rising Star (a Foxconn subsidiary), Wistron, and Pegatron. Samsung became the anchor.
Then the pandemic redefined what "non-negotiable" meant within the administrative system.
Samsung reconfigured its India manufacturing to focus on high-value handsets above the ₹15,000 invoice threshold, met the incremental targets, and qualified for the 6% incentive. Apple's contract manufacturers; Foxconn Hon Hai, Wistron, and Pegatron; could not. The India Cellular and Electronics Association (ICEA) wrote to MeitY Secretary Ajay Prakash Sawhney in December 2020 warning that most companies were facing shortfalls due to chip shortages and COVID-led supply chain disruptions, and requesting that any shortfall in FY21 targets be allowed to roll forward into subsequent years.
The government's institutional response was to preserve the programme, not to reward the performer.
The Finance Minister announced the extension in June 2021: the scheme tenure would expand from five years (FY21-FY25) to six years (FY21-FY26), with companies given the option to choose any five consecutive years. Apple's contract manufacturers chose FY22-FY26, effectively erasing FY21 from their scheme timeline. Samsung, which had already committed to starting from FY21, could not retroactively undo its performance. The extension did not penalise Samsung. But it eliminated the competitive advantage that Samsung's COVID-year performance had created. Every other company received, at no cost, what Samsung had earned through operational discipline during the most disrupted manufacturing year in recent history.
Samsung was not consulted before the modification was announced. This is not an anomaly; it is how scheme governance operates in India. Scheme modifications are processed through inter-ministerial institutional channels; MeitY, NITI Aayog (National Institution for Transforming India), the Department of Expenditure, and in some cases the Empowered Committee. The evaluation is programme-level, not beneficiary-level. The question the administrative system was answering was not "is this fair to Samsung?" It was "if we enforce the original timeline, do we lose Foxconn, Wistron, and Pegatron?" Losing Apple's entire Indian manufacturing operation because its contract manufacturers missed one year's target during a global pandemic would have been a strategic loss far greater than any individual beneficiary's grievance. The institutional calculus prioritised programme preservation over individual recognition.
The institutional thinking this reveals is specific. The Ministry of Finance evaluates schemes through a fiscal lens: what is the exchequer's exposure, what are the utilisation rates, and how can the scheme's fiscal footprint be optimised. MeitY evaluates through a programme lens: are the production targets being met, is the manufacturing base expanding. Neither ministry's institutional logic prioritises the individual company's experience. Samsung's ₹900 crore claim was not held because someone decided to punish Samsung. It was held because the verification process operates on its own institutional timeline, and no mechanism exists within the system to fast-track a claim simply because the claimant is the scheme's largest performer. The system processes the programme. It does not manage the relationship.
Then came the verification friction.
Samsung filed its FY21 incentive claim for approximately ₹900 crore. MeitY's verification process identified what officials described as "discrepancies in invoicing." The claim was reviewed, scrutinised, and eventually approved at approximately ₹500 crore. The production target had been met. The investment commitment had been fulfilled. But the verification layer applied its own institutional lens; evaluating not whether Samsung had performed, but whether Samsung's documentation met every specific requirement of the scheme guidelines as interpreted by the verifying authority. The distinction between performance and documentation compliance is where most companies encounter the institutional system's true operating logic.
Meanwhile, Padget Electronics (Dixon Technologies' subsidiary) became the first company to receive PLI disbursement, approximately ₹50 crore for FY22. Apple's contract manufacturers, who had skipped FY21 entirely, began receiving their incentives for FY22 without the verification complications that Samsung's FY21 claim had encountered. The company that performed first was paid last. Samsung itself missed the FY22 threshold as the step-up targets ratcheted up, recovered from FY23 onwards, and remained the scheme's largest participant through its full five-year cycle.
First, India's incentive architecture is designed for the cohort, not for the outperformer. The scheme's objective was to build an electronics manufacturing base in India. Samsung was one instrument of that objective, not the objective itself. When the cohort's collective performance was disrupted by COVID, the institutional response was to adjust the scheme to keep the cohort intact. Individual outperformance was acknowledged but not institutionally privileged.
Second, scheme parameters in India are not contractual commitments in the commercial sense. The government retains the discretion to modify timelines, adjust eligibility conditions, and re-author scheme terms based on programme-level assessment. A company that builds its India investment thesis on the assumption that scheme terms are fixed for the full tenure may discover that the terms are reshaped when circumstances change. The scheme notification is the starting point of a policy instrument, not the final word.
Third, the verification layer operates independently from the performance layer. Meeting production targets and meeting documentation requirements are two separate institutional processes evaluated by two separate institutional functions. The PMA verifies documentation. The Empowered Committee evaluates programme outcomes. A company can satisfy one and face scrutiny from the other. Aligning documentation methodology with the verification authority's specific requirements is as important as meeting the production target itself.
Fourth, first-mover advantage does not function in India's incentive architecture the way it functions in commercial markets. In a market, being first to perform creates competitive differentiation. In a government scheme, being first to perform creates a verification precedent; the first claim is scrutinised most carefully because it establishes the interpretive framework for all subsequent claims. Samsung's FY21 claim was the first global-company claim the system had ever processed under this scheme. Every ambiguity in the scheme guidelines was resolved, for the first time, against Samsung's specific filing. Subsequent claimants benefited from the interpretive clarity that Samsung's claim had forced the system to yield.
Fifth, the relationship survived the friction. Samsung completed the entire five-year PLI cycle by FY25, filing a final incentive claim of approximately ₹1,000-1,200 crore for FY25 on incremental production of ₹25,000-30,000 crore in its final year. The fact that a company whose claim was held, whose scheme terms were reshaped mid-cycle, and whose verification was delayed still chose to expand in India, becoming its second-largest smartphone exporter, says something specific about how industrial policy functions here: it is not a contract. It is a negotiated coexistence.
For every company entering a government incentive scheme in India, Samsung's PLI trajectory carries a specific lesson: perform, but do not assume that performance alone determines the institutional outcome. The scheme will be re-authored if the programme's strategic objectives require it. The verification process will apply its own lens regardless of the production numbers. And the institutional system will prioritise the programme's survival over any individual participant's timeline. The companies that manage this successfully are those that understand the scheme not as a contract but as a policy instrument; one that the government will reshape, extend, modify, and re-interpret as the system's logic demands.
The PLI for Large Scale Electronics Manufacturing ended on March 31, 2026. The cost disability it was designed to offset, 10 to 12% versus China, has not been eliminated; it has been held in abeyance. The entire ICEA membership, Apple, Foxconn, Dixon, Flex, Tata Electronics, has presented a roadmap to MeitY seeking PLI 2.0 to sustain momentum through FY31. The fact that not a single major manufacturer is willing to continue at current production levels without renewed incentive support is itself the most precise institutional signal about what PLI 1.0 actually achieved: it built volume, not self-sufficiency.