PRODUCTION-LINKED INCENTIVES (Syllabus: GS Paper 3– Economy)

Context: The Ministry of Electronics and Information Technology recently solicited input from stakeholders to develop a production-linked incentive (PLI) scheme for electronics-component manufacturing, aiming to address India's competitive disadvantages compared to other nations.

Production-Linked Incentives

• About: It is a form of performance-linked incentive to give companies incentives on incremental sales from products manufactured in domestic units.
• Total outlay: INR 1.97 Lakh Crores. 
• Aim:

o Boosting the manufacturing sector and to reduce import.

o To create national manufacturing champions.

o To create 60 lakh new jobs, and an additional production of 30 lakh crore during next 5 years.

• The purpose:

o To attract investments in key sectors and cutting-edge technology.

o Ensure efficiency and bring economies of size and scale in the manufacturing sector.

o Make Indian companies and manufacturers globally competitive.

• Key sectors: Schemes across 14 key sectors, like telecommunication, white goods, textiles, manufacturing of medical devices, automobiles, speciality steel, food products, high-efficiency solar PV modules, advanced chemistry cell battery, drones, and pharma etc.

  Production Linked Incentive Scheme 

• About: It is a next version of PLI for IT Hardware for Enhancing India’s Manufacturing Capabilities and Enhancing Exports.
• Objective: Broadening and deepening of the manufacturing ecosystem by encouraging the localisation of components and sub-assemblies and allowing for a longer duration to develop the supply chain within the country.