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Importance of Production Linked Incentive (PLI) Scheme in India


What is PLI Scheme?

The production linked Incentive scheme is a milestone step by the Government of India for making an Atma Nirbhar Bharat. This scheme provides incentives on product sales, which means the more you sell the more they will get benefitted. Keep in mind the product must be made in India.

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It was launched in March 2020. It aims to attract foreign countries to set up their production unit here in India and to encourage Indian companies to expand their production lines to become global competitors. Here the vision of the government is to make India a global manufacturing hub and keep partners in the global supply chain. 

Apart from focusing on reducing import expenses and boosting the cost competitiveness of local goods, the scheme provides incentives to enterprises for strengthening their domestic manufacturing. PLI is a scheme that rewards incremental sales of products made in India. The first three PLI projects were approved in March of last year, and ten more were notified in November, with six of them being approved subsequently. The competent ministries and departments must implement the strategy for their respective sectors. According to a Cabinet announcement from November last year, any savings from one approved sector's PLI programmer can be used to fund another approved sector's PLI scheme.

The scheme started with only 3 sectors, mainly mobile phones, pharmaceutical and medical device manufacturing unit sectors. But with the rapid growth in this sector and good future prospect of PLI scheme, the government extended to other sectors ranging from Food Processing, Telecom, Electronics, Textile, Automobile, Specialty Steel, Auto components, Solar Photo Voltaic Module and white goods such as air conditioner and LED’s.

Under this expansion, a big budget of 1.45Lakh crore is allotted by the finance minister Smt Nirmala Sitharaman. 

PLI Scheme in India

The objective of the Scheme.

The PLI scheme is designed with four objectives, i.e.

  • Target specific product areas
  • Introduce Non-tariff measures in order to compare more effectively with cheap imports.
  • Boost domestic and export sales to make manufacturing competitive and sustainable.
  • Promote manufacturing at home while encouraging investment from within and outside India.

The government's endeavor to achieve an Atmanirbhar Bharat is based on PLI Schemes. The goal is to make domestic manufacturing globally competitive and to develop global manufacturing champions. The scheme's objective is to reward businesses for increased sales of products made in India over the previous year. They were created with the intent of boosting local manufacturing in strategic and sunrise areas, reducing import bills and curbing cheaper imports, improving the cost competitiveness of domestically manufactured goods, and increasing domestic capacity and exports.

The reason it has caught on is that the application process is not very complicated and the incentive offered is very simple and easy to calculate. The incentive is 4-6% of the incremental sale within a defined based year. As a result, several companies Samsung, Foxconn, LAVA mobile, Micromax, and many more have enrolled themselves in this scheme. In the Parma sector also nearly 130 companies enrolled themselves in this scheme. Apart from this, in all the sectors listed, different companies are approaching the government to avail the benefits.

Advantages of PLI Scheme:

  • Huge Employment Opportunity: 

The world has already witnessed Covid-19 which resulted in huge unemployment. We can recover from the tragic situation with the help of this PLI scheme. A company with its settlement can provide thousands of direct and indirect jobs. Therefore this can be a game changer in the aspect of employment 

  • Technology Transfer and Skilled Human Resource

India has a population of 1.3 billion, still, our massive work population is unskilled. With the onboarding of Giant firms in the Indian market, comes their advanced technology and expertise which will eventually enhance our force of skilled labor.

  • Self-reliant and self-sufficient:

India has envisioned a bright new future for itself at a time when economic nationalism is the order of the day as the world order shifts away from globalization. Prime Minister Narendra Modi has issued an impassioned cry for self-reliance, dubbed "Aatmanirbhar Bharat," in which he speaks of connecting India with the rest of the world while moving away from isolation and toward internal strength.

The government is considering the essential areas, where we are dependent on China and so with this in focus, we are covering a path of an India which is self-reliant and self-sufficient

  • Vocal for Local:

In India, the concept of Vocal for Locals is not new. It began as a revolution during Gandhi an era when British commodities were exploited and indigenous items were prioritized in order to preserve India's economy and principles.

Today, though, things are different. In our country, foreign items are preferred over Indian goods because of their superior quality and lower pricing. Unfortunately, India's industries lack the infrastructure of wealthy countries, but the 'Make in India' philosophy is changing that for the better. New entrepreneurs are encouraged, and people are encouraged to buy Indian products, which will help India stand on its own in a better fashion, eventually allowing it to become a developed nation.

Vocal for locals is not a war against international goods and their purchases. Rather it’s the thinking made for the world, not just India. Social media platform like Koo is a live example for us.

We at present are looking to accomplish a 5 trillion dollar economy by 2025 and to do so we need huge investment so effective implementation of this scheme can bring us to a fruitful result. 

With the Production linked incentive scheme can act as an opportunity by which we can grab a place of strategic importance in the world. Every country is eyeing China for the virus they spread, manufacturers are moving out of China and this is the right time to attract them so that we can be the factory of the world. We are all aware that the opportunity knocks at the door but only once and this is our time to grab it.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.


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I have over 8 years of experience working in product regulatory compliance. Currently, I work as the operations head at Corpseed Ites Pvt Ltd, where my Job role is providing best in class consulting in the field of product compliance.
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