Production linked incentives 

Production linked incentives 

Subject: Economy

Section: Fiscal policy

PLI Schemes launched in March 2020, are a cornerstone of the Government’s push for achieving an AtmaNirbhar Bharat. The idea is to provide support to the sectors, regain dominance in global trade and be more prepared for the volatilities and shocks in global supply chains as opposed to the protectionist approach of the pre-1991 era.

The objective of the scheme is to

• boost domestic manufacturing in sunrise and strategic sectors,
• improve cost competitiveness of domestically manufactured goods,
• enhance domestic capacity and economies of scale.
• to attract investments in sectors of core competency and cutting-edge technology
• generate direct and indirect employment by reaching global scales
• increasing competitiveness to ensure penetration of Indian companies in the global value chains.

This scheme is expected to make domestic manufacturing globally competitive and will create

global champions in manufacturing.

The Government has committed Rs.1.97 lakh crores, over 5 years starting from 2021-22 in 13 sectors. Recently, PLI in the 14th sector – drones and drone components has been included with an additional layout of Rs. 120 crores.

The initial 13 sectors are Electronic/Technology Products, Medical devices, Drug intermediaries and APIs, Mobile Manufacturing and Specified Electronic Components, Pharmaceuticals drugs, Telecom & Networking Products, Telecommunications, Food Products, White Goods (ACs & LED), High Efficiency Solar PV Modules, Automobiles & Auto Components, Advance Chemistry Cell (ACC) Battery, Textile Products: Man Made Fabrics segment and technical textiles and Specialty Steel.

Production linked incentive for large scale electronics manufacturing

The PLI Scheme for the automobile and auto components industry,

It has two components

• the Champion OEM incentive scheme and 
• the Component Champion incentive scheme.

The Champion OEM Incentive scheme is a ‘sales value linked’ scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments. The Component Champion Incentive scheme is a ‘sales value linked’ scheme, applicable on Advanced Automotive Technology components of vehicles, Completely Knocked Down (CKD)/ Semi Knocked Down (SKD) kits, Vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors, etc.