PRODUCTION LINKED INCENTIVE (PLI) SCHEME 2.0

PLI Scheme, as the Production Linked Incentive Scheme is commonly abbreviated as, is an initiative started by the Government of India to not only encourage foreign companies to find workforce in the country and thereby generate employment, but also encourage domestic and local production to create micro jobs

- Tushar Maheshwari

Introduction

This scheme is a flagship programme of the Government of India launched in March 2020. The scheme aims to encourage domestic manufacturing and reduce India's dependence on imports, particularly from China. The scheme provides financial incentives to eligible companies for increasing their production in identified sectors.

As clear by the name, PLI scheme is an initiative that provides incentives to domestic industries to boost local production. When that happens, specifically tailored products emerge that satisfy a selected niche of target audience. Domestic businesses also help in cutting down import bills. As per the PLI scheme, the government encourages domestic companies and establishments to set up or expand on manufacturing units to increase production, to which the government provides incentives on incremental sales. Under the PLI Scheme, eligible companies will receive financial incentives based on their incremental sales or exports over a period of five years.

Context

1. Over the past 8 years, the electronics manufacturing industry in India has experienced consistent growth, achieving a commendable Compound Annual Growth Rate (CAGR) of 17%. This year, it has surpassed a significant production milestone, reaching 105 billion USD (equivalent to about Rs 9 lakh crore).

2. India has successfully emerged as the world's second largest manufacturer of mobile phones, highlighting its prowess in the electronics manufacturing sector. Notably, the exports of mobile phones have also reached a remarkable milestone of 11 billion USD (about Rs 90 thousand crores) this year.

3. India is attracting the attention of the global electronics manufacturing ecosystem, positioning itself as a prominent player in the field. The country is rapidly emerging as a major hub for electronics manufacturing, capitalizing on the opportunities presented by the industry.