PRODUCTION LINKED INCENTIVE SCHEME

Subject : Govt Schemes

Context : The government aims to expand the ambit of the PLI scheme to include as many as ten more sectors such as food processing and textiles other than the already included mobile phones, allied equipment, pharmaceutical ingredients and medical devices.

Concept :

• In order to boost domestic manufacturing and cut down on import bills, the central government in March this year introduced production linked incentive scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units.
• Apart from inviting foreign companies to set shop in India, the scheme also aims to encourage local companies to set up or expand existing manufacturing units.
• So far, the scheme has been rolled out for mobile and allied equipment as well as pharmaceutical ingredients and medical devices manufacturing.
• These sectors are labour intensive and are likely, and the hope is that they would create new jobs for the ballooning employable workforce of India.

Need of Scheme:

• The idea of PLI is important as the government cannot continue making investments in these capital intensive sectors as they need longer times for start giving the returns.
• Instead, what it can do is to invite global companies with adequate capital to set up capacities in India.
• To make India more compliant with our WTO commitments and also make it non-discriminatory and neutral with respect to domestic sales and exports.
• Apart from cutting down on imports, the PLI scheme also looks to capture the growing demand in the domestic market.