What is PLI scheme? Sectors that are likely to benefit from PLI schemes

PLI schemes are government incentives to boost local manufacturing in key sectors in order to reduce import dependencies and boost job creation.

Production linked incentive schemes

PLIs aim to boost manufacturing in key sectors of India such as telecom, electronics, automobile, renewable energy, and textiles. Furthermore, it incentivises industries to adopt modern, scalable practices in high-growth-potential areas while also boosting job creation, fuelling the country’s growth story.

Production-linked incentive (PLI) schemes are financial subsidies that the government provides to companies that manufacture their goods in India. These incentives are designed to improve the manufacturing ecosystem in the country, thereby reducing dependence on imports, while generating local employment. Incremental sales as a result of local manufacturing are incentivised with tax rebates or reduced import duties.

With an outlay of about USD 26 billion, the move aims to increase the manufacturing sector’s share of the GDP from the existing 16-17% to 25%. Furthermore, the government is expecting to create six million jobs with this boost in domestic manufacturing, across different key sectors.

Also Read: Know more about PLI schemes

PLI schemes sectors

The PLI schemes are spread out across 13 key sectors which include the following:

  1. Telecom and specified electronics: India aims to become a viable alternative to China for electronics manufacturing. The government is offering cash incentives of 3-6% on incremental increase in sales of locally manufactured goods in the next five years to eligible organisations. Depending on the category type, companies with a consolidated global manufacturing revenue of INR 50 crore, 100 crore, and 10,000 crore are eligible for the subsidy. They must fulfil the criteria of the minimum cumulative investment and incremental sale to enjoy the incentive.
     
  2. IT hardware: Comprising laptops, servers, all-in-one PCs, tablets, servers, etc., the scheme provides 1-4% cash incentives on incremental sales over 2019-20, for products manufactured in the country. The INR 7,350-crore scheme aims to generate nearly two lakh jobs.
     
  3. Pharmaceutical: The nearly INR 7000-crore PLI scheme is targeted towards manufacturing critical drugs and equipment that are currently not manufactured in India. For different categories of drugs, the incentives range from 3-10% for different time periods.
     
  4. Automobile: The INR 26,000 crore scheme intends to promote clean and advanced automotive technologies, especially applicable for hydrogen and battery electric vehicles. It aims to generate nearly 8 lakh jobs and reduce oil imports.
     
  5. Energy: The government intends to increase India’s renewable energy capacity from 150 GW to 500 GW by 2030. The INR 19,500 crore allocation is expected to bring INR 30,000 crore additional investment in solar photovoltaic cell manufacturing, with an addition of about 55 GW every year to the national grid.
     
  6. Textile: The textile industry in India is highly fragmented, and unorganised with outdated technology. The INR 10,683-crore PLI scheme for the textile industry focuses on improving India’s manufacturing ability of man-made fabrics (MMF). Furthermore, import duty on cotton has also been negated.
     
  7. Advanced chemistry cell (ACC) battery: ACC batteries are a crucial technology that forms the bedrock of the automobile and electronics industries. The INR 18,000-crore PLI scheme aims to set up 50 GWh manufacturing capacity and attract investments worth INR 45,000 crore.

Other sectors with PLI schemes include drone manufacturing, white goods, food products, and specialty steel.

Also Watch: Important Government Schemes- Production Linked Incentive (PLI) Scheme

How will the PLI subsidies be given?

The doling out of subsidies will be done on a yearly basis, provided the manufacturer meets the criteria laid down as per the target sector. The broad requirements include additional investment, value creation, localisation, and incremental sales.

How will PLIs impact the economy?

PLIs are expected to reduce import dependencies across industries, while boosting local manufacturing capabilities, and facilitating job creation. It is estimated to add nearly 4% to the GDP every year, if implemented correctly. The idea is to make India self-reliant, and a manufacturing hub – a long-standing promise of the incumbent government.

PLIs aim to boost manufacturing in key sectors of India such as telecom, electronics, automobile, renewable energy, and textiles. Furthermore, it incentivises industries to adopt modern, scalable practices in high-growth-potential areas while also boosting job creation, fuelling the country’s growth story.

Production-linked incentive (PLI) schemes are financial subsidies that the government provides to companies that manufacture their goods in India. These incentives are designed to improve the manufacturing ecosystem in the country, thereby reducing dependence on imports, while generating local employment. Incremental sales as a result of local manufacturing are incentivised with tax rebates or reduced import duties.

With an outlay of about USD 26 billion, the move aims to increase the manufacturing sector’s share of the GDP from the existing 16-17% to 25%. Furthermore, the government is expecting to create six million jobs with this boost in domestic manufacturing, across different key sectors.

Also Read: Know more about PLI schemes

PLI schemes sectors

The PLI schemes are spread out across 13 key sectors which include the following:

  1. Telecom and specified electronics: India aims to become a viable alternative to China for electronics manufacturing. The government is offering cash incentives of 3-6% on incremental increase in sales of locally manufactured goods in the next five years to eligible organisations. Depending on the category type, companies with a consolidated global manufacturing revenue of INR 50 crore, 100 crore, and 10,000 crore are eligible for the subsidy. They must fulfil the criteria of the minimum cumulative investment and incremental sale to enjoy the incentive.
     
  2. IT hardware: Comprising laptops, servers, all-in-one PCs, tablets, servers, etc., the scheme provides 1-4% cash incentives on incremental sales over 2019-20, for products manufactured in the country. The INR 7,350-crore scheme aims to generate nearly two lakh jobs.
     
  3. Pharmaceutical: The nearly INR 7000-crore PLI scheme is targeted towards manufacturing critical drugs and equipment that are currently not manufactured in India. For different categories of drugs, the incentives range from 3-10% for different time periods.
     
  4. Automobile: The INR 26,000 crore scheme intends to promote clean and advanced automotive technologies, especially applicable for hydrogen and battery electric vehicles. It aims to generate nearly 8 lakh jobs and reduce oil imports.
     
  5. Energy: The government intends to increase India’s renewable energy capacity from 150 GW to 500 GW by 2030. The INR 19,500 crore allocation is expected to bring INR 30,000 crore additional investment in solar photovoltaic cell manufacturing, with an addition of about 55 GW every year to the national grid.
     
  6. Textile: The textile industry in India is highly fragmented, and unorganised with outdated technology. The INR 10,683-crore PLI scheme for the textile industry focuses on improving India’s manufacturing ability of man-made fabrics (MMF). Furthermore, import duty on cotton has also been negated.
     
  7. Advanced chemistry cell (ACC) battery: ACC batteries are a crucial technology that forms the bedrock of the automobile and electronics industries. The INR 18,000-crore PLI scheme aims to set up 50 GWh manufacturing capacity and attract investments worth INR 45,000 crore.

Other sectors with PLI schemes include drone manufacturing, white goods, food products, and specialty steel.

Also Watch: Important Government Schemes- Production Linked Incentive (PLI) Scheme

How will the PLI subsidies be given?

The doling out of subsidies will be done on a yearly basis, provided the manufacturer meets the criteria laid down as per the target sector. The broad requirements include additional investment, value creation, localisation, and incremental sales.

How will PLIs impact the economy?

PLIs are expected to reduce import dependencies across industries, while boosting local manufacturing capabilities, and facilitating job creation. It is estimated to add nearly 4% to the GDP every year, if implemented correctly. The idea is to make India self-reliant, and a manufacturing hub – a long-standing promise of the incumbent government.

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