Domestic value addition
In one line: Domestic value addition is the share of a product's value that is created within the country rather than imported.
Why it matters
If a phone is assembled in India from imported parts, sales and exports rise but most of the value, technology and jobs stay abroad. Higher value addition means local suppliers, deeper skills and lower import bills.
In the PLI assessment
White goods are the success story: value addition rose from about 20% in FY20 to 55% in FY25, with compressors, copper tubes, motors and electronic parts now made locally. Telecom is the warning: the scheme does not require value addition, so firms can import components and still claim incentives. The report flags dependence on imported high-value components as a key challenge.
Where to go next
- MSMEs in supply chains
- Production Linked Incentive
Domestic value addition in the news
- NITI Aayog-IIMA review: PLI schemes have paid out 18.5% of their ₹1.91 lakh crore outlay 13 November 2026
The test of real localisation
On the reference shelf
Previous-year questions on this
- 2025 · GS3 · 15 marks Discuss the rationale of the Production Linked Incentive (PLI) scheme. What are its achievements? In what way can the functioning and outcomes of the scheme be improved?
- 2025 · GS3 · 15 marks India aims to become a semiconductor manufacturing hub. What are the challenges faced by the semiconductor industry in India? Mention the salient features of the India Semiconductor Mission.
- 2023 · GS3 · 10 marks Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard.
- 2017 · GS3 · 10 marks Account for the failure of manufacturing sector in achieving the goal of labour-intensive exports rather than capital-intensive exports. Suggest measures for more labour-intensive rather than…
- 2017 · GS3 · 15 marks "Industrial growth rate has lagged behind in the overall growth of Gross-Domestic-Product(GDP) in the post-reform period" Give reasons. How far the recent changes is Industrial Policy are capable of…
- 2014 · GS3 · 12.5 marks Normally countries shift from agriculture to industry and then later to services, but India shifted directly from agriculture to services. What are the reasons for the huge growth of services…
- 2023 · Prelims Consider the following statements: Statement-I: India accounts for 3.2% of global export of goods. Statement-II: Many local companies and some foreign companies operating in India have taken…