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Production Linked Incentive (PLI) Schemes In India

Know what is production linked incentive, objectives, eligibility & how to apply in simple way. Read to know the complete details!

24 Nov,2022 10:02 IST 1605
Production Linked Incentive (PLI) Schemes In India

First introduced in March 2020, production-linked incentive (PLI) schemes targeted three industries—mobile and electric components, pharmaceuticals (key starting materials/active pharmaceutical ingredients), and medical devices. A key objective was to develop local supply chain capacities, introduce new downstream operations, and encourage investment in high-tech production. The PLI scheme has since become more extensive, with plans introduced for multiple sectors to promote export-oriented manufacturing in India.

What Is PLI Scheme?

PLI or Production Linked Incentive is a scheme that encourages companies to increase sales by manufacturing their products domestically. In addition to inviting foreign companies to establish manufacturing units in India, the program also enables Indian companies to expand existing units, create jobs and reduce dependency on imports.

This scheme is a part of the Atmanirbhar Bharat movement. It was initially launched for three industries, as mentioned above, but later expanded to include ten others. These industries include:

• Department of Pharmaceuticals: Prescription medications
• Department for Promotion of Industry and Internal Trade: ACS and LED (White Goods)
• Ministry of New and Renewable Energy: Energy-Efficient Solar PV Modules
• Department of Heavy Industry: Auto Components and Automobiles
• Ministry of Steel: Specialty Steel
• Ministry of Information & Electronics Technology - Technology or Electronic Products
• Department of Telecommunications: Networking and Telecom Products
• Ministry of Food Processing Industries: Food Products
• Department of Heavy Industry: ACC (Advance Chemistry Cell) Battery
• Textile Products: Ministry of Textiles: MMF segment and technical textiles

The Objectives Of PLI Schemes

The scheme primarily aims to achieve the following objectives.

• Support food manufacturing companies with a requisite minimum sales level willing to expand their processing capacity and develop their brands abroad to encourage the development of strong Indian brands.
• Develop champions for food manufacturers around the world.
• Make Indian food brands more visible and accepted abroad by strengthening their global appeal.
• Increasing accessibility of off-farm jobs.
• Ensuring agricultural products are priced at a remunerative level to maintain farmers' income.

Who Is Eligible For The PLI Scheme?

The eligibility parameters may vary between sectors. For example, the PLI scheme for automobiles may differ slightly from that for electronics.

Checking the official website will be helpful in this regard. However, you must meet the following general requirements.

• Investing incrementally and selling produced goods are the determining factors for telecom units.
• The food processing sector must hold 50% of the stock of SMEs and other enterprises.
• Pharma companies should have a net worth of at least 30% of their total investment. They must classify their project as a greenfield project.
• The domestic value addition or DVA for fermentation-based goods must be 90 per cent minimum.
• The DVA of chemically synthesised products should be near 70 per cent.

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Targets and Strategy For Implementation

• The government will roll out the scheme across the country.
• Project Management Agencies (PMAs) are responsible for implementing the plan.
• Among other things, the PMA evaluates proposals and applications for support, verifies eligibility for incentives, and scrutinises claims for incentive payments.
• Under this scheme, an incentive will be paid over six years, ending in 2026-27.
• The scheme is subject to a fund limit, i.e. the cost cannot exceed the approved amount. The government will assign each beneficiary a maximum incentive award on approval. Regardless of achievement or performance, you must remain within the maximum limit.
• A significant expansion of processing capacity through this program is anticipated by 2026-27, enabling the production of processed foods worth Rs. 33,494 crores and creating almost 2.5 lakh jobs.

Methodology And Mechanisms Of Administration and Implementation

• The Cabinet Secretary would chair an Empowered Group of Secretaries at the Centre, whose purpose would be to monitor the scheme.
• The Inter-Ministerial Approval Committee (IMAC) will determine which applicants are eligible for this scheme and sanction and release funds for incentives.
• The Ministry will develop a comprehensive Annual Action Plan to implement the scheme.
• The program would be evaluated by a third party and have a midterm evaluation mechanism incorporated.

How To Apply For A PLI Scheme?

• Step 1: Go to the official website of the PLI scheme.
• Step 2: Click on “Register” on the homepage.
• Step 3: Fill out the PLI Scheme registration form with as much information as possible, including the PAN, the name of the company, the address, etc.
• Step 4: By clicking "Register", you can complete your application

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Q1. How does the PLI scheme benefit the automobile industry?
Ans. Using this scheme, India's automobile and advanced technology product sectors will overcome pricing inequalities.

Q2. How many schemes are there in PLI?
Ans. PLI schemes apply to 14 sectors, including automobiles, drones, electronics, IT hardware, metals and mining, pharmaceuticals, solar modules, textiles, apparel, telecom, and advanced chemistry cell batteries.

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