The Production Linked Incentive, or PLI, programme intends to provide enterprises with incentives based on increased sales of items created in domestic units. The initiative encourages international firms to establish units in India, but it also attempts to encourage Indian firms to establish or expand existing manufacturing facilities, so creating more jobs and reducing the country's dependency on imports from other nations.
It was first established in April 2020 for the Large Scale Electronics Manufacturing sector, but was later expanded to include ten additional industries by the end of the year. This programme was created in conjunction with India's Atmanirbhar Bharat initiative.
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Production Linked Incentive (PLI) Scheme [UPSC Notes]:-Download PDF Here
PLI Scheme – A Brief Background
- The IT Ministry launched it as part of the National Policy on Electronics to provide 4-6 percent incentives to electronic enterprises that manufacture electronic components such as mobile phones, transistors, and diodes.
- The major goal of this strategy was to encourage international investors to set up manufacturing facilities in India while simultaneously encouraging local industries to grow and create jobs.
- In April 2020, the PLI scheme targeted Large Scale Electronics Manufacturing, and by the end of the year (November 2020), ten more sectors had been added to the PLI scheme, including food processing, telecom, electronics, textiles, specialty steel, automobiles and auto components, solar photovoltaic modules, and white goods such as air conditioners and LEDs.
- All electronic manufacturing enterprises that are either Indian or have a registered unit in India would be able to apply for the programme in terms of eligibility.
- Finance Minister Nirmala Sitharaman announced in the Union Budget 2021 the addition of thirteen new sectors to the PLI Plan for a five-year term, with Rs. 1.97 lakh crores set aside for this scheme beginning in the Financial Year 2022.
Expansion of Production Linked Incentive Scheme
On November 11, 2020, the Union Cabinet, led by Prime Minister Narendra Modi, authorised the implementation of the PLI plan for ten critical industries that can strengthen India's manufacturing capabilities and exports.
The ten new sectors to which the programme has been expanded, as well as the authorised financial expenditure, are listed below:
| Sectors | Implementing Ministry/Department | Approved financial outlay over a five-year period (Rs. in crores) |
| Advance ChemistryCell (ACC) Battery | NITI Aayog and Department of Heavy Industries | 18100 |
| Electronic/Technology Products | Ministry of Electronics and Information Technology | 5000 |
| Automobiles& Auto Components | Department of Heavy Industries | 57042 |
| Pharmaceuticals drugs | Department of Pharmaceuticals | 15000 |
| Telecom & Networking Products | Department of Telecom | 12195 |
| Textile Products: MMF segment and technical textiles | Ministry of Textiles | 10683 |
| Food Products | Ministry of Food Processing Industries | 10900 |
| High-Efficiency Solar PV Modules | Ministry of New and Renewable Energy | 4500 |
| White Goods (ACs & LED) | Department for Promotion of Industry and Internal Trade | 6238 |
| Speciality Steel | Ministry of Steel | 6322 |
Based on the ten sectors to which the Production Linked Incentive scheme was expanded to, the government aims at achieving the following targets:
- The administration wants to integrate India into the global supply chain and boost exports.
- By 2025, India is predicted to have a USD 1 trillion digital economy, as demand for electronics is predicted to rise as a result of programmes such as Smart City and Digital India.
- The PLI plan will make the Indian automobile industry more competitive and would help the sector to become more global.
- The Indian textile industry is one of the world's largest, and this programme will attract significant investment in the sector, boosting local manufacturing, particularly in the MMF segment and technical textiles.
- As the world's second-largest producer of steel, India's inclusion in the PLI system will benefit the country by potentially expanding export options.
- Similarly, telecommunications, solar panels, medicines, white goods, and all of the other areas described may help India expand economically and become a worldwide manufacturing centre.
Production Linked Incentive Scheme for Large Scale Electronics Manufacturing
- The first phase of the PLI programme was dedicated to the Large Scale Electronics Production sector, with the goal of increasing mobile phone manufacturing in India as well as establishing ATMP (Assembly, Testing, Marking, and Packaging) facilities.
- The plan was estimated to cost INR 40,995 crore in total.
- It was created to benefit a select group of international investors, mostly Indian local manufacturers.
- With a significant potential for job creation, the initiative has the ability to employ over 2 lakh people in the electronics manufacturing industry over the next five years.
- In the instance of electronics, the assembly of products has been done in India, while the manufacture has been done elsewhere. Electronics may be manufactured and assembled in India thanks to the PLI plan and the Make in India push.
- Mobile phone manufacturing in India has increased dramatically, from roughly INR 18,900 crore in 2014-15 to INR 1,70,000 crore in 2018-19, and domestic demand is nearly entirely covered by local manufacture. This may be boosted much further using PLI.
- The cash outlay for the first phase of the Production Linked Incentive (PLI) Scheme is shown in the table below:
| Sectors | ImplementingMinistry/Department | Financial outlays(Rs. in crore) |
| Mobile Manufacturing and Specified Electronic Components | MEITY | 40951 |
| Critical Key Starting materials/Drug Intermediaries and Active Pharmaceutical Ingredients | Department of Pharmaceuticals | 6940 |
| Manufacturing of MedicalDevices. | 3420 |
Production Linked Incentive Scheme for Pharmaceuticals
- PLI for Pharmaceuticals was implemented over a five-year period, from FY 2020-21 to FY 2028-29. From 2022-23 to 2027-28, total additional sales of Rs.2,94,000 crore and total additional exports of Rs.1,96,000 crore are forecasted.
- As a consequence of the sector's expansion, the initiative is predicted to produce 20,000 direct and 80,000 indirect jobs for both skilled and unskilled workers.
- The programme will run from Fiscal Year 2020-21 through Fiscal Year 2028-29. This will involve the processing of applications (FY 2020-21), an optional one-year gestation time (FY 2021-22), a 6-year incentive, and the disbursal of incentive for completion (FY 2027-28).
Production Linked Incentive (PLI) Scheme [UPSC Notes]:-Download PDF Here
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