What is the PLI Scheme?
The Production Linked Incentive (PLI) Scheme is a central government scheme, notified in April 2020 as a part of ‘National Policy on Electronics’ for large scale electronics manufacturing. The aim of the scheme is to provide financial incentives for domestic manufacturing of goods and attract large investments in value chain. Following the success of a scheme to locally produce mobile phones and their components, the government plans to extend this financial incentive scheme to domestic manufacturing of essential electronic gadgets such as laptops and tablets. The scheme was subsequently rolled out for pharmaceutical ingredients and medical devices. The PLI Scheme aims at making India a self-reliant nation.
Key Features of the Scheme:
Eligibility for the Scheme:
1. Companies that make mobile phones (₹15,000 or more) will get an incentive up to 6 per cent on incremental sales of phones made in India.
2. Companies which are owned by Indian nationals and make such mobile phones are entitled for ₹200 crore incentive during next four years.
3. Investments on land and buildings are not eligible.
4. Expenditure incurred on plant, machinery, equipment, R&D and transfer of technology for the manufacture of mobile phones and related electronic items are eligible.
What is it expected to achieve for India?
Over five years, the scheme is expected to:
• Result in production worth ₹10.5 trillion, exports contributing to more than 60%.
• Garner an investment of ₹11,000 crore and create 300,000 direct jobs.
• Reduce imports by focussing on domestic market.
• Attract foreign companies and encourage local companies to establish/ expand existing facilities.
• Comply with WTO (World Trade Organization) commitments and ensure non-discriminatory and neutral approach in domestic sales and exports.
Who are the beneficiaries till date?
Who can apply under the PLI Scheme?
Companies registered in India and manufacturing goods covered under the target segments of the scheme.
Applicants can operate existing or new manufacturing units at more locations in India.
What are the issues and challenges with the scheme?
Production Linked Incentive scheme relieves the government from making investments in capital intensive sectors.
The scheme has the potential to attract FDI and boost domestic manufacturing, setting up capacities, generating jobs and creating an enabling environment to compete globally.
The key to the success of this scheme rests in its implementation.
Prof. Bulusu Bhaskara Rao
Prof. Bulusu Bhaskara Rao has been working in the Academic Wing of Icfai Foundation for Higher Education since 2013, as a Subject Matter Expert in Operations Management.
Prior to this he worked in a Public Sector Organization for 37 years.
He won national awards for studies on Sickness in Industries and HRD. He is an MBA from Osmania University and MSc Tech from Andhra University.
His areas of interest include Supply Chain Management, Quality Management, Sustainability Management and Corporate Communications.