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Production-Linked Incentive (PLI) Scheme - Potential To Boost to India's Manufacturing And Exports

Last updated: Jul, 2021

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The central government introduced the production-linked incentive (PLI) scheme in March 2020 to make India a competitive player in global markets and boost domestic manufacturing & exports. The PLI scheme aims to give companies incentives on incremental sales of products manufactured in domestic units. The scheme invites foreign companies to set up units in India; however, it also aims to encourage local companies to set up or expand existing manufacturing units, generate more employment and reduce the country's reliance on imports.

The scheme was originally designed for FY20 for a few select industries such as mobiles phones and allied equipment manufacturing, pharmaceutical ingredients and medical devices. This was implemented by the Ministry of Electronics and Information Technology (MEITY) and the Department of Pharmaceuticals with a financial outlay of Rs. 51,311 crore (US$ 7,089 million) to be used over a five-year period. In FY2020, the scheme benefitted ~150 manufacturing units, generating incremental sales of Rs. 46,400 crore (US$ 6,187 million) and showcased significant potential for additional employment over the next eight years.

As a result, the scheme has been expanded to accommodate an additional 10 ‘sunrise’ sectors to boost the economy and India’s self-reliance. This initiative was announced by the Union Finance Minister, Ms. Nirmala Sitharaman, during the Atmanirbhar Bharat 3.0 Stimulus Package for FY20–21, with an estimated allocation of Rs. 145,980 crore (US$ 20,169 million) spread across five years.

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Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.