PLI SCHEME

PLI SCHEME

Subject : Government Schemes

Context : The Indian Cellular and Electronics Association (ICEA) has written letters to the NITI Aayog to consider declaring 2020-21 as zero year for production-linked incentive (PLI) scheme for manufacturing of mobile phones.

Concept :

• PLI schemes for all sectors that have been announced since April last year envisage incentives on achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods net of taxes.
• Since the government notified the PLI for mobile manufacturing on April 1 last year, FY21 was considered as the base year for the calculation of incremental investments and sales, and therefore the incentives to be given to companies.

How does 2020-21 being considered as zero year help cellphone makers?

• For the purposes of calculation of incremental investment, incremental sales of manufactured goods net of taxes and therefore the incentives, cellphone companies have urged the government that the current financial year be considered as zero year.
• In essence, they say that for the purposes of calculation of the incentives to be given to under the PLI scheme, the government should consider the incremental investments they will make and sales of products that they achieve from next financial year.
• The most common claim is that the lockdown in the first three months of this fiscal left them with very little time to get started with the building of or expansion of old units.