Production Linked Incentive Scheme

Production Linked Incentive Scheme

Key Highlights of the Updated Production Linked Incentive (PLI) Scheme for IT Hardware
1. Enhancements to the PLI Scheme for IT Hardware

• Initial Launch:
  • Introduced in March 2021, the scheme initially provided up to 4% incentives on incremental investments in domestic manufacturing for eligible entities.
• Updated Incentives:
  • Incentive rates have been raised to 5% under the updated scheme.
  • An optional additional incentive has been added to promote the use of domestically manufactured components.

2. Revised Budget and Duration

• Increased Budget:
  • The updated scheme now has a budget allocation of ₹17,000 crore, marking a substantial financial commitment.
• Extended Tenure:
  • The scheme will operate over a span of six years, ensuring a longer-term incentive structure for businesses.

3. Impact on Electronics Manufacturing

• Sector Growth:
  • India’s electronics manufacturing industry has achieved an impressive compound annual growth rate (CAGR) of 17% over the last eight years.
• Mobile Phone Exports:
  • In 2023, India recorded over USD 11 billion in mobile phone exports, solidifying its position as the world’s second-largest mobile handset producer after China.

---

Overview of the Production Linked Incentive (PLI) Scheme
1. Scheme Objectives

• Boost domestic manufacturing in key and emerging sectors.
• Enhance the global competitiveness of Indian-made goods and foster "global champions" in manufacturing.
• Reduce reliance on imports by promoting local production and lowering import bills.
• Increase exports and expand India’s manufacturing capacity.

2. Strategic Intent

• Designed under the framework of the ‘AatmaNirbhar Bharat Abhiyan’ (Self-Reliant India) initiative.
• Incentivizes companies based on incremental sales of products manufactured domestically compared to a baseline year.
• Encourages both domestic and foreign companies to establish or expand manufacturing units in India.

3. Sectors Covered

• Total Coverage:
  • The Union Budget 2021-22 allocated ₹1.97 lakh crore for PLI schemes across 14 high-potential sectors.
• Key Sectors:
  • Mobile phones and electronic products.
  • Automobiles and auto components.
  • Pharmaceuticals and medical devices.
  • Specialty steel, solar PV modules, and advanced chemistry cell batteries.
  • Drones, telecom and networking equipment, white goods (ACs and LEDs), food products, and textiles.

Key Takeaways
This updated PLI scheme demonstrates the Indian government’s commitment to transforming India into a global manufacturing hub while enhancing the country’s competitiveness in IT hardware and electronics production

Mind Sprint