What is the significance of PLI scheme in key sectors?

admin November 5, 2021
Updated 2021/11/05 at 7:02 AM

The production linked incentive (PLI) programme, which seeks to increase local manufacturing and exports, is projected to –

In the next five years, increase the country’s output by USD 520 billion. Make India self-sufficient in terms of producing products for both domestic and international markets, establishing it as a worldwide manufacturing centre. Enhance exports, attract investment, and generate employment by making local manufacturing more competitive and efficient, building capacity and taking advantage of economies of scale.

Why is it necessary to have a production-linked scheme?

According to analysts, the PLI concept is essential since the government cannot continue to invest in these capital-intensive industries because they take longer to pay off. Instead, it should encourage foreign businesses with sufficient money to set up operations in India. The sort of industrial expansion that we need necessitates a wide range of programmes, but the government cannot stretch itself too thin. Electronics and pharmaceuticals are huge industries in and of themselves, so it would be very beneficial if the government could concentrate on labor-intensive industries like clothes and leather at this time.

How would it motivate manufacturing operations?

For a five-year term, the production-linked incentive programme provides qualified manufacturing firms with a 4-6 percent bonus on additional sales above the base year of 2019-20. Large local and international firms will be enticed to increase output, create a competitive environment, and lead to more inclusive development under the PLI plan.


The goal of the umbrella scheme for the Development of Pharmaceutical Industry is to improve India’s manufacturing capabilities by increasing investment and production in the sector, as well as contributing to product diversification in the pharmaceutical sector to high-value goods. Domestic manufacturers will benefit. It is anticipated to help customers have access to a broader variety of inexpensive medications. Increase the value addition in exports by encouraging the development of high-value goods in the nation. From 2022-23 to 2027-28, total additional sales of Rs.2,94,000 crore and total incremental exports of Rs.1,96,000 crore are forecasted. Create opportunities for both skilled and unskilled workers, with an estimated 20,000 direct and 80,000 indirect jobs as a consequence of the sector’s expansion. Encourage innovation in the creation of complicated and high-tech goods, such as new treatments and in-vitro diagnostic devices, as well as medication self-sufficiency. Improve the Indian population’s access to and affordability of medicinal goods, particularly orphan medicines. A total of Rs.15,000 crore is anticipated to be invested in the pharmaceutical industry as a result of the scheme.

 IT Hardware

The plan offers a production-linked incentive to encourage local manufacture and significant investments in the IT Hardware value chain. For a period of four (4) years, the Scheme would provide qualifying businesses with a 4 percent to 2 percent / 1 percent incentive on net additional sales (over the base year, i.e. 2019-20) of products produced in India and covered by the target category. Enhance the country’s electronic ecosystem growth. Because of its connection with global value chains, India will be ideally positioned as a worldwide centre for Electronics System Design and Manufacturing (ESDM), becoming a destination for IT Hardware exports. Approximately the next four years, it has the potential to generate over 1,80,000 jobs (direct and indirect). Give a boost to domestic value addition for IT hardware, which is projected to reach 20% to 25% by 2025.

 Telecom Sector

To establish India as a global manufacturing hub for telecom equipment such as core transmission equipment, 4G/5G Next Generation Radio Access Network and Wireless Equipment, Access & Customer Premises Equipment (CPE), Internet of Things (IoT) Access Devices, Other Wireless Equipment, and Enterprise equipment such as switches and routers. To compensate for the massive import of telecom equipment worth more than Rs. 50 thousand crores by bolstering “Made in India” goods for both local and international markets. For the purposes of calculating cumulative incremental sales of manufactured products net of taxes, the financial year 2019-20 will be used as the Base Year. Local manufacturing is addressed in the MSME category because the government wants MSMEs to play a key role in the telecom industry and emerge as national champions. Over the next five years, additional production of approximately 2.4 lakh crores would be achieved, with exports of around 2 lakh crores. The programme is anticipated to attract over 3,000 crores in investment, as well as a large number of direct and indirect jobs and taxes.

 Production of Large-Scale Electronics

The plan offers a financial incentive to encourage local production and significant investments in the electronics value chain, which includes electronic components and semiconductor packaging. Electronics manufacturing firms would get a 4 to 6% incentive on additional sales (above base year) of products produced in India for the next five years under the programme. Only target sectors – mobile phones and certain electrical components – will be covered under the programme. Domestic value addition for mobile phones is projected to increase from 20-25 percent to 35-40 percent by 2025 with the assistance of the programme. Increase the number of direct and indirect employment by 8 lakh.

 Food Processing Industry (PLISFPI)

With a budget of Rs. 10,900 crore, it would be implemented from 2021-22 to 2026-27.

Objective: To assist in the development of global food manufacturing champions that are commensurate with India’s natural resource endowment, as well as to promote Indian food brands in foreign markets. The Ministry of Food Processing Industries is accepting applications from three types of applicants for sales-based incentives and subsidies to conduct Branding & Marketing activities overseas under the scheme:

Category-I: Applicants in this category may also engage in branding and marketing efforts outside of the United States and apply for a grant via the programme using a single application.

Category II: SMEs who manufacture innovative/organic goods and apply for the PLI Incentive based on sales are classified as.

Category III: Applicants seeking a grant exclusively for the purpose of conducting branding and marketing operations in another country.

 Specialty Steel

A budgeted expenditure of Rs 6,322 crore would be made during a five-year period from 2023 to 2024. It’s value-added steel, and it’s produced by processing regular finished steel. Coating, plating, and heat treatment are used to transform ordinary finished steel into high-value steel. They may be utilised in a variety of strategic applications, including defence, space, and electricity, in addition to the automotive industry and specialised capital goods. Coated/plated steel products, high strength/wear resistant steel, specialty rails, alloy steel goods and steel wires, electrical steel, and so on are all kinds of stainless steel.

 textile sector

To assist India in regaining its historical position as the world’s leading exporter of textiles. The incentives will promote investment in new capabilities in MMF clothing, MMF fabrics, and 10 technical textile sectors or products. The programme is expected to generate over Rs. 19,000 crore in investment, resulting in the creation of an extra 7.5 lakh direct employment. There will be two investment tiers, each with its own set of incentives. To be eligible for the PLI, a person or company must spend a minimum of Rs. 300 crore in the plant, equipment, and civil works to manufacture the specified goods. Individuals or businesses in the second group must spend a minimum of Rs. 100 crore to be eligible for the rewards. Investment in aspirational districts, tier-three and tier-four municipalities, and rural regions would be prioritised. Gujarat, Uttar Pradesh, Maharashtra, Tamil Nadu, Punjab, Andhra Pradesh, Telangana, and Odisha are anticipated to gain from the programme. Applicants would have a two-year investment period, with the ‘performance’ year being 2024-2025. The five-year incentive period would begin in 2025-2026 and conclude in 2026-2027.

 auto industry:

A production-linked incentive (PLI) plan of Rs. 26,058 crore was approved to boost the manufacturing of high technology and green cars, auto components, and drones. Benefits: Over a five-year period, it will attract Rs. 42,500 crore in new investment into the automotive and auto component industries. It will contribute to the creation of more than 7.5 lakh employment. The programme is designed for both current and new automobile companies.

A ‘champion OEM’ incentive is available on battery-electric cars and hydrogen fuel cell vehicles under the ‘sales value linked’ programme.

Advanced automotive technology components are eligible for a ‘component champion’ incentive.

 Drone Industry:

Will encourage the development of a worldwide supply chain for Advanced Automotive Technologies in India. More than 7.6 lakh people will be employed as a result of your efforts. Over the next five years, the sector would get incentives totaling Rs 26,058 crore. In three years, it will bring in about 5,000 crores in new investments and 1,500 crores in additional output.

Battery Storage Using Advanced Chemistry Cells (ACC)

With an expenditure of Rs 18,100 crore, the goal is to establish a production capacity of 50 GigaWatt Hour of ACC and five Giga Watt Hour of Niche ACC. ACCs are a new category of sophisticated storage technologies that can store electric energy as electrochemical or chemical energy and then convert it back to electricity as needed. It will also offer electric mobility a significant boost, which will help three-wheelers, four-wheelers, and large trucks. Currently, India is importing Battery Storage Equipment.

National Programme on High-Efficiency Solar PV Modules

With a budget of Rs.4,500 crore, the National Programme on High-Efficiency Solar PV Modules aims to achieve a production capacity of Giga Watt (GW) in high-efficiency solar PV modules. Solar PV manufacturers will be chosen via a competitive bidding procedure that will be open to the public. After the commissioning of solar PV manufacturing facilities, PLI will be paid out on sales of high-efficiency solar PV modules for a period of five years.

The following are the anticipated benefits of the scheme:

Integrated solar PV manufacturing facilities with a capacity of 10,000 MW are being built. Solar PV manufacturing plants have received approximately Rs.17,200 crore indirect investment. Over the next five years, a demand of Rs.17,500 crore for ‘Balance of Materials’ is expected. Around 30,000 people are employed directly, with another 1,20,000 employed indirectly. Every year, approximately Rs.17,500 crore is spent on import replacement. Research and development efforts to improve the efficiency of solar PV modules are boosted.

 White Goods (Air Conditioners and LED Lights)

a budget of Rs. 6,238 crore has been set aside. Companies that produce air conditioners and LED lights would be eligible for a four- to six-percentage-point incentive on additional sales of products made in India over a five-year period. This programme is not open to entities that have benefited from any previous PLI scheme run by the government of India. It will be applied throughout the country. The Scheme is expected to benefit a number of global and local businesses, including a number of MSMEs. The PLI Scheme is expected to generate incremental investment of Rs. 7,920 crore, incremental production of Rs. 1,68,000 crore, exports of Rs 64,400 crore, earn direct and indirect revenues of Rs 49,300 crore, and create an additional four lakh direct and indirect job opportunities over a five-year period.

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