The Production Linked Incentive (PLI) scheme is an initiative by the Indian government aimed at boosting domestic manufacturing ability, increasing employment generation and encouraging higher import substitution. The first ever disbursement of this scheme was recently approved by the empowered Committee for mobile manufacturing under the ‘Large-Scale Electronics Manufacturing’ sector, with Padget Electronics being the inaugural beneficiary.
Financial Framework of PLI Scheme
For the successful implementation of the PLI schemes across different sectors, the government has earmarked Rs 1.97 lakh crore. Furthermore, an additional allocation of Rs 19,500 crore was made specifically for solar PV modules in the Budget 2022-23. This initiative was launched in March 2020, initially targeting the mobile and allied component manufacturing, electrical component manufacturing, and medical devices industries.
Incentives Offered in the PLI Scheme
The incentives provided under the PLI scheme are calculated based on incremental sales, ranging from a minimum of 1% for electronics and technology products to an impressive 20% for manufacturing key starting drugs and certain drug intermediaries. For certain sectors like advanced chemistry cell batteries, textile products, and the drone industry, the incentive to be provided will be calculated strictly based on sales, performance, and local value addition over a five-year period.
Sectors Incorporated in the PLI Scheme
The Indian government has so far announced the PLI scheme for 14 sectors. These sectors include automobile and auto components, electronics and IT hardware, telecom, pharmaceuticals, solar modules, metals and mining, textiles and apparel, white goods, drones, and advanced chemistry cell batteries.
Objectives of the PLI Scheme
The primary objective of this scheme is to reduce India’s dependence on China and other foreign countries by stimulating domestic production. It supports labour-intensive sectors and sets out to increase the employment ratio. The scheme also aims to reduce import bills and invite foreign companies to set up units in India while encouraging domestic enterprises to expand their production bases.
PLI Scheme for Large-Scale Electronics Manufacturing
The PLI scheme on large-scale electronics manufacturing falls under the Union Ministry of Electronics and Information Technology (MEITY). This sector-specific scheme, which includes manufacturing of mobile phones and specified electronic components, was approved with a total outlay of Rs 38,645 crores.
Thirty-two beneficiaries had been approved under the PLI scheme for large-scale electronics manufacturing so far, including ten for mobile manufacturing (five global and five domestic companies). The scheme has already generated employment for 28,636 people, and over the last three years, exports have grown by an impressive 139%.
Significance of the PLI Scheme
The PLI scheme is expected to transform India into a competitive destination for electronics manufacturing. It aligns perfectly with the Atmanirbhar Bharat initiative aiming to create more global champions from India. The scheme is expected to bring in additional production worth Rs 10,69,432 crore and generate employment for 7,00,000 people.
