Under the "Make in India" initiative, India has made PLI (Production Linked Incentive) schemes a pillar of manufacturing strengthening, while simultaneously building an institutional foundation for ESG disclosure through SEBI's phased mandatory rollout of BRSR Core (Business Responsibility and Sustainability Reporting Core). The concurrent expansion of production capacity via PLI and the building of disclosure systems via BRSR complicates the assessment of Indian manufacturers as procurement partners. Japanese procurement managers are increasingly expected to evaluate both the competitiveness changes driven by PLI and the progress on BRSR compliance together.
The Structure of PLI Schemes and Their Implications for Green Manufacturing
PLI schemes offer subsidies linked to revenue growth and were deployed across 14 sectors — including electronics, pharmaceuticals, automotive, textiles, food, and solar — from 2021 to 2022. Subsidy rates vary by sector but generally provide 3–8% of qualified incremental revenue over five years. In sectors where Japanese companies are likely to engage as buyers — electronics components, automotive parts, specialty chemicals, and solar panels — PLI spending is substantial, and recipient companies have been rapidly expanding capital investment and employment.
PLI schemes can include direct incentives for green manufacturing. The Solar PV Module PLI aims to strengthen the international competitiveness of domestically manufactured panels and promote domestic supply chain development for the renewable energy industry. The ACC (Advanced Chemistry Cell) Battery PLI similarly targets building domestic manufacturing capacity for EV batteries and facilitating an industrial transition toward low-carbon mobility. As PLI-recipient companies in these segments become subject to mandatory BRSR disclosure, the number of companies managing both subsidy qualification and environmental and social reporting is growing.
The Overlap Between PLI Recipients and BRSR Mandatory Rollout
PLI scheme application requirements include capital investment commitments, and companies making investments above a certain threshold tend to grow in scale regardless of listed/unlisted status. One pathway is that companies going through IPO to access capital markets then fall under BRSR applicability. Meanwhile, already-listed PLI-recipient companies (e.g., Tata Electronics, Dixon Technologies, Mankind Pharma) are advancing disclosure in accordance with the BRSR implementation schedule.
The ESG disclosure quality of PLI-recipient companies is not necessarily higher than that of mid-tier listed companies unrelated to PLI. Because PLI is linked to production and revenue expansion, management decisions naturally prioritize capital investment and capacity expansion over ESG system development. However, the dual pressure of the BRSR Core mandatory rollout schedule (expanding to the top 1,000 companies by FY2026-27) and ESG supplier questionnaires from Western customers is pushing large PLI-recipient manufacturers to elevate ESG compliance on their priority list.
Renewable Energy Procurement in India — Major State-Level Disparities
The feasibility of Scope 2 emissions reduction through renewable energy procurement varies significantly by location in India. This difference is an important variable when evaluating whether a supplier can realistically achieve its Scope 2 reduction targets.
Strong Renewable Locations (Gujarat, Rajasthan, Tamil Nadu)
High solar and wind potential, with institutional infrastructure for open access (direct purchase of renewable electricity via the transmission grid) in place. For manufacturers with RE100 commitments or 100% renewable energy procurement targets, locating in or sourcing from these states is a realistic option.
Developing Renewable Infrastructure (Maharashtra, Karnataka)
Major manufacturing hubs, but the cost and complexity of renewable energy transition are high due to elevated open access surcharges and grid stability concerns. Grid constraints can be a barrier in regions with high industrial electricity demand.
Difficult Renewable Procurement Regions (Uttar Pradesh, Bihar, etc.)
High coal-fired power dependence and limited renewable resources. It is difficult for manufacturers to reduce Scope 2 emissions, and if a supplier located in these states has Scope 2 reduction targets, plans will be substantially constrained. Japanese procurement managers should verify the state of a supplier's location as a first step.
The Reality of India's Green Manufacturing Transition
Scope 1 and 2 emissions management across Indian manufacturing as a whole is advancing rapidly due to the mandatory BRSR Core rollout. However, in practice, many small and mid-scale factories remain heavily reliant on coal and diesel, and the transition to renewables is limited to large listed companies with substantial facilities.
India's electricity grid emission factor is approximately 0.71 kgCO2/kWh (CEA 2023 figure), which is higher than Japan (approximately 0.44–0.50 kgCO2/kWh). As a result, Scope 2 emissions from Indian manufacturing tend to be higher than comparably sized facilities in Japan or Europe, making the impact of transitioning to green electricity on Scope 2 reduction particularly significant. Switching to renewable electricity carries both environmental merit and a substantial business incentive to materially improve absolute Scope 2 figures.
The Green Manufacturing Certification Ecosystem — India-Specific Developments
In India, beyond ISO 14001 (environmental management) certification, dedicated green manufacturing certification and rating systems are being developed. The Star Rating system operated by the Bureau of Energy Efficiency (BEE) applies energy efficiency certification to factories and equipment. Green factory certifications from the Indian Green Building Council (IGBC) are also gaining adoption in manufacturing.
These domestic certifications are aligned with the energy consumption intensity disclosure requirements under BRSR Core, and companies holding certifications tend to find BRSR Core compliance relatively straightforward. For Indian manufacturers with a high proportion of exports to Europe and North America, obtaining green manufacturing certifications alongside EcoVadis scores and CDP responses is an efficient approach to simultaneously satisfying European customer supplier evaluation criteria.
Confirm the Overlap of PLI Sector and BRSR Mandatory Timing
Check which phase of the BRSR Core mandatory schedule (expanding to the top 1,000 companies by FY2026-27) a PLI-sector business partner falls into. Even before mandatory requirements apply, cases where Western customer ESG demands have already arrived ahead of schedule mean that the practical speed of compliance becomes the evaluation axis.
Assess Renewable Energy Feasibility Based on Plant Location
Manufacturers located in strong renewable locations such as Gujarat, Rajasthan, and Tamil Nadu have higher feasibility for renewable energy procurement. In states like Uttar Pradesh and Bihar, renewable infrastructure is limited, and achieving Scope 2 reduction targets may be difficult.
Use CDP and EcoVadis Track Record to Judge Readiness
Among mid-tier listed Indian manufacturers, those with a track record of CDP responses or EcoVadis scores can be assessed as having ESG data collection systems at a certain standard. Where neither has been completed, there is a possibility that systems are not in place even as BRSR mandatory requirements approach.
Practical Insights for Procurement Evaluation
PLI schemes are rapidly increasing the competitiveness of specific Indian manufacturing sectors, and quality, cost, and supply capacity assessments from earlier periods may need to be revised. At the same time, rapidly growing companies tend to concentrate management resources on capacity expansion, creating the risk that ESG system development falls behind. A procurement evaluation framework that simultaneously assesses "is competitiveness increasing through PLI?" and "is compliance with BRSR and Western ESG requirements keeping pace?" is essential.
BRSR compliance progress can be confirmed as public information in the "Business Responsibility and Sustainability Report" section of companies' annual reports. PLI certification status can be confirmed on the Invest India website. Combining these public sources provides an efficient way to form a preliminary picture of a supplier before conducting an on-site assessment.