FYI, PLI is Having the Right Effect

Context: The future of investment and manufacturing looks good in India with Production-Linked Incentive (PLI) scheme, which is uniquely based on ‘milestone-based incentives’ and is output-oriented.

Intended outcomes of Production-Linked Incentive (PLI) scheme:

• Galvanize investments into manufacturing and exports: by creating an enabling environment for foreign companies for investment and expansion
• Enhance revenue: A net gain is estimated at Rs 65,000 crore in mobiles and telecom equipment alone over five years.
• Enhance manufacturing competitiveness: Being ‘milestone-based incentives’ and output-oriented will result in import substitution, export promotion and cost competitiveness.
  • Promotes employment-oriented sectors: like textiles, mobiles, white goods and food processing; (creating job opportunities)
  • Induction of new technologies: g. battery cell, Solar Photovoltaic (PV) module etc.…

Some Positive Outcomes of the PLI scheme:

• Apple plans to start manufacturing the iPad in India for reducing its reliance on Chinese manufacturing.
• Amazon has recently announced a manufacturing unit to be set up in Chennai.
• Various stockbroking firms (e.g. William O’Neil) are also closely watching progress under the PLI scheme.

Way forward:

• State-level reforms: needed for creating better infrastructure and logistics, provide cheaper power, and curbing rent-seeking by officials and local leaders.
• Create an ecosystem of nearby suppliers (in high tech equipment): for companies seeking to manufacture sophisticated telecommunications equipment (e.g. 5G).