PRODUCTION LINKED INCENTIVE (PLI) SCHEME
Saturday Brain Storming Thought (275) 17/05/2025
The Production Linked Incentive (PLI) scheme is a government initiative in india that offers financial incentives to domestic companies to boost local manufacturing in specific sectors
These incentives are linked to the incremental increase in production and sales, encouraging companies to invest in technology and expand their operations
The scheme aims to enhance India’s manufacturing capabilities, attract investments and achieve greater self-reliance in key sectors, contributing to the broader vision of Atmanirbhar Bharat
Key aspects of the PLI scheme
1) Incentives
Companies receive financial incentives, typically ranging from 4% to 6% of their incremental sales, for a period of 4-6 years
2) Targeted Sectors
The PLI scheme focuses on 14 key sectors, including electronics, textiles, pharmaceuticals, automobiles and more
3) Objectives
The scheme aims to boost domestic production, attract investments, promote technological advancements and increase India’s global competitiveness
4) Performance-based
The incentives are linked to the performance of the companies, encouraging them to improve efficiency, adopt new technologies and achieve economies of scale
5) Investment and Growth
The PLI scheme is designed to drive significant investments in manufacturing, create jobs and contribute to economic growth
6) MSME Ecosystem
The scheme also aims to foster the development of ancillary units and create a cascading impact on India’s MSME Ecosystem
Objectives of PLI Scheme
1) To ensure that more employment opportunities
2) To provide support to the existing domestic companies
3) To encourage foreign companies to set up their production activities in India
4) To enhance exports
5) To boost domestic manufacturing
6) To become a major player in the supply chain
PLI Scheme benefits for India
1) Boosting up the Indian economy
2) Don’t want to depend on foreign countries
3) It would make India a global manufacturing hub
4) Goal to reduce imports
5) India became a global competitor
6) Self-sufficient India
Future of PLI Scheme
1) Hence improving the GDP making future economy
2) Potential to be a manufacturing hub for foreign companies
3) Want to capitalize on exports by introducing the scheme
4) Expecting an overall growth in the employability
5) There can be stability in attrition rate due to this scheme
Key features of PLI Scheme
1) Simple and direct incentives based on incremental sales
2) Focus on attracting large investments
3) Non-terrif measures to complete more effectively with cheap imports
4) Simplified application procedure
General Parameters of PLI Scheme
1) Sector specific fixed Threshold Investment
2) Incentive on net incremental sales or cost reimbursement
3) Requirement to meet the prescribed domestic value addition
4) Conditions regarding exports to be fulfilled, depending on scheme to scheme
5) Cumulative employment generation
6) Manufacturing capacity and extent of integration
7) Minimum Compound Annual Growth Rate (CAGR) in sales
8) Specified category of products with minimum sales
History about PLI Scheme
1) Launched in March 2020 and Targeted industries are
A) Mobile and allied component manufacturing
B) Electrical component manufacturing
C) Medical devices
Extended sectors for PLI Scheme
1) Mobile manufacturing
2) Manufacturing of medical devices
3) Automobiles and auto components
4) Pharmaceuticals
5) Drugs
6) Specialty steel
7) Telecom and networking products
8) Electronic products
9) White goods (ACs and LEDs)
10) Food products
11) Textile products
12) Solar PB modules
13) Advanced chemistry cell (ACC) battery
14) Drones and Drone components
COMPILED BY:-
Er. Avinash Kulkarni
9822011051
Chartered Engineer, Govt Regd Valuer, IBBI Regd Valuer
