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Indian Economy

Expansion of Production-Linked Incentive Scheme

  • 22 Oct 2020
  • 3 min read

Why in News

The government will extend the production-linked incentive (PLI) scheme to eight more sectors to boost domestic manufacturing.

Key Points

  • PLI Scheme is an outcome- and output-oriented scheme where incentives will be paid only if the manufacturers make the goods.
  • This scheme will give cash incentives for five to seven years and all the sunrise and important sectors are proposed to be covered in this.
    • The sectors may be automobile, networking products, food processing, advanced chemistry and solar PV manufacturing.
  • Need:
    • Sunrise sectors are promising sectors but they may need support in the initial stage.
    • Export base can be developed in sectors under PLI scheme.
    • There is a growing demand in the world for diversification in supply chains and India can become a major player.
  • With the view to make India a manufacturing hub, the government launched the PLI scheme for mobile phones (electronic manufacturing) and it was extended to pharma products and medical equipment sectors.

PLI Scheme for Large Scale Electronics Manufacturing

  • The scheme proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including electronic components and semiconductor packaging.
  • Under the scheme, electronics manufacturing companies will get an incentive of 4 to 6% on incremental sales (over base year) of goods manufactured in India for a period of next 5 years.
  • The scheme shall only be applicable for target segments namely mobile phones and specified electronic components.
  • The government estimates that with the PLI scheme, domestic value addition for mobile phones is expected to rise to 35-40% by 2025 from the current level of 20-25% and generate additional 8 lakh jobs, both direct and indirect.
    • The production of mobile phones in the country has surged eight-times in the last four years from around Rs. 18,900 crore in 2014-15 to Rs 1.7 lakh crore in 2018-19.

Source: TH

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