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Production Linked Incentive (PLI) Scheme

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  • Last Updated : 05 Jul, 2022
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Production Linked Incentive scheme is a flagship programme of the Government of India, started in March 2020. The programme is started to boost manufacturing activity in India. In simple words, incentives are linked with production. It means more production and more incentives. The main objective of this programme is to discourage the import of goods and increment the employment in the country.

Production Linked Incentive Scheme:

The government made a 1.97 trillion rupees corpus to facilitate this scheme for various sectors and an additional allocation of rupees 19500 crores for solar PV modules in budget 2022-23. The Government want to create India as an export-oriented country. So, India first decides to create special economic zones, industrial parks and industrial corridors like Defence corridor (one is in Uttar Pradesh, then in Tamil Nadu. After completing this infrastructure, the government have to attract FDI and implement these industrial parks and corridor. 

Objective of Production Linked Incentive (PLI) Scheme:

  • The Government is planning to achieve 60 lakh new jobs and additional production through this scheme. It encourages industries that require a lot of labour and seeks to boost India’s employment rate.
  • The Indian government wants to reduce its dependency on China and be an alternative to the world supply chain system by using its massive human resources.
  • The government also focuses to reduce its import bill as India has a roughly 192 billion trade deficit. 

Plan of the Government by the Production Linked Incentive (PLI) Scheme:

  • At an early stage, this scheme is used by electronics and information technology as a pilot project. After its initial success, it extended to 14 sectors.
  • Government is serious about this scheme, so to remove bottlenecks the government has appointed an empowered group of secretaries who identify the bottlenecks in PLI schemes, coordinate between states and companies for faster approvals, evaluate and ensure quick investments in PLI schemes, and ensure overall turnaround of projects.
  • NITI AAYOG assigns an external agency – state-owned IFCI Ltd or SIDBI – to design and prepare the database. This database will capture value addition, actual exports against commitments made, and job creation. A dashboard to flag hurdles at the state level will also be created.

Incentives in the Production Linked Incentive (PLI) Scheme:

Incentives are based on the incremental jump in sales, vary from 1% to 20%. Like as 1% for the electronics and technology products and a maximum of 20% for critical industries starting drug and drug intermediates. But some sectors are based on sales bases incentive increments like cell batteries, drone components and their allied industry, and textile goods these all are based on the value addition, and sales, during five year time period.   

Implementation of the Production Linked Incentive (PLI) Scheme:

In the launching of the year 2020, this scheme was applicable in three industries. These were mobile and allied component manufacturing, medical devices and their component and electrical component Manufacturing. 

After the initial success of the PLI scheme, the government extended it to 14 sectors. Automobiles and auto parts, electronics and IT hardware, telecom, pharmaceuticals, solar cells, metals and mining, textiles and clothing, white goods, drones, and advanced chemical cell batteries are some examples of these industries. 

Related Frequently Asked Questions and Answers:

Q1. Which Ministry Implements The Production Linked Incentive (PLI) Scheme?

Ans: This scheme is applied by individual ministries in the government of India. But firstly this scheme comes into force for electronics production so the Ministry of Electronics and Information Technology is responsible for implementing it.

Q2. How many rupees are allocated for the Production Linked Incentive (PLI) Scheme?

Ans: Total allocation is 1.97 lakh rupees or 1.97 trillion rupees. 

Q3. What are the objectives of  the Production Linked Incentive (PLI) Scheme?

Ans: The Government is planning to achieve 60 lakh new jobs and additional production through this scheme. It encourages industries that require a lot of labour and seeks to boost India’s employment rate. Through PLI, the Indian government want to reduce its dependency on China and be an alternative to the world supply chain system by using its massive human resources. The government also focus to reduce its import bill as India has a roughly 192 billion trade deficit. 

Q4. What are the different incentives given in the Production Linked Incentive (PLI) Scheme?

Ans: Incentives are based on the incremental jump in sales, vary from 1% to 20%. Like as 1 % for the electronics and technology products and a maximum of 20% for critical industries starting drug and drug intermediaries. But some sectors are based on sales bases incentive increments like cell batteries, drone components and their allied industry, and textile goods these all are based on the value addition, and sales, during five year time period.    FDI(foreign direct investment ) is become lucrative due to this scheme, so definitely FDI inflow increases in the country.

Q5. Is the Production Linked Incentive (PLI) Scheme help in the ‘MAKE IN INDIA’ Programme?

Ans: Yes, PLI scheme helps Indian product in the international market due to tax incentive that helps in cost-cutting of the product. So these products can help in export boost and MAKE IN INDIA programme.

 

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