For Prelims: Production Linked Incentive (PLI) Scheme, Budget 2022-23.

For Mains: PLI scheme and its Significance.

What is the PLI Scheme?

• About:
  • The PLI scheme was conceived to scale up domestic manufacturing capability, accompanied by higher import substitution and employment generation.
  • The government has set aside Rs 1.97 lakh crore under the PLI schemes for various sectors and an additional allocation of Rs 19,500 crore was made towards PLI for solar PV modules in Budget 2022-23.
  • Launched in March 2020, the scheme initially targeted three industries:
    • Mobile and allied Component Manufacturing
    • Electrical Component Manufacturing and
    • Medical Devices
• Incentives Under the Scheme:
  • The incentives, calculated on the basis of incremental sales, range from as low as 1% for the electronics and technology products to as high as 20% for the manufacturing of critical key starting drugs and certain drug intermediaries.
  • In some sectors such as advanced chemistry cell batteries, textile products and the drone industry, the incentive to be given will be calculated on the basis of sales, performance and local value addition done over the period of five years.
• Sectors for which the PLI Scheme has been Announced:
  • So far, the government has announced PLI schemes for 14 sectors including 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:
  • The Government introduced this scheme to reduce India’s dependence on China and other foreign countries.
  • It supports the labour-intensive sectors and aims to increase the employment ratio in India.
  • This scheme works to reduce the import bills and boost domestic production.
    • However, PLI Yojana invites foreign companies to set up their units in India and encourages domestic enterprises to expand their production units.