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All you need know about Production Linked Incentive Scheme (PLI scheme)

Updated: Feb 1



About Production Linked Incentive (PLI)


Hon'ble Finance Minister, Smt Nirmala Sitharaman has announced an outlay of INR 1.97 Lakh Crores for the Production Linked Incentive (PLI) Schemes across 13 key sectors, to create national manufacturing champions and generate employment opportunities for the country’s youth. In addition to the three schemes announced earlier in March 2020, GoI has further introduced the following 10 new PLI schemes in November 2020.


Adding to the series of reforms is the announced production-linked incentive (PLI) schemes signaling a meaningful turn in India’s industrial policy.


The Basic premise on which the PLI schemes stands are as follows:

  1. Outcome-based and result-oriented: This means that incentives will be disbursed only after production has taken place in the country.

  2. Linking incentives to output: The calculation of incentives will be based on incremental production to be achieved at a high rate of growth. To achieve this incremental production, beneficiaries will be required to make additional investments in establishing green-field facilities or carrying out expansion of existing facilities.

  3. Creating ‘champions’ to maximize impact: The scheme focuses on size and scale by selecting those players who can deliver on volumes. The targeted nature of the scheme will make it highly effective and the beneficiaries are likely to become globally competitive.

  4. Cutting-edge technology, Integrate with global value chains: Selection of sectors has solely been based on its scope to cover cutting-edge technology, integrate with global value chains and create large-scale employment.


Benefits of PLI schemes:


Implementation of the schemes:

The PLI schemes provide eligible manufacturing companies incentives ranging from four to six percent on incremental sales over the base year for a four to six-year period. It is like a subsidy being provided by direct payment – as budgeted – for domestically manufactured goods by the chosen beneficiaries.


These schemes offer turnover linked incentives to approved investors, upon meeting the specified investment, capacity, and turnover criteria. Given their simple structure and the likely benefits, they have quickly become popular with businesses. There have been rapid developments on this front, with newer schemes being launched and some others nearing closure.


Which sectors are covered under India’s PLI schemes?


Sector

Outlay Rs Cr.

Incentive

Status (as Sept 2021)

March 2020

Part of 21940

5% to 20% for a period of 6 year

Closed

40000

4% to 6% for a period of 5 years

Closed

18420

​5% for a period of 5 year

Closed

November 2020

7325

​1% to 4% for a period of 4 years

Closed

Department of Pharmaceuticals: Pharmaceuticals drugs

Part of 21940

​3% to 10% for a period of 6 years

Closed

12195

​4% to 7% for a period of 5 years

Closed

10900

4% to 10% for a period of 6 years

Evaluation Stage

6238

4% to 6% for a period of 5 years

Open

4500

​Based on sales, performance criteria, and Local value addition for a period of five years

Closed

57042

​Based on sales, performance criteria, and Local value addition for a period of five years

Evaluation Stage

18100

​Based on sales, performance criteria, and Local value addition for a period of five years

Open

10683

​Based on sales, performance criteria, and Local value addition for a period of five years

Open

Ministry of Steel: Specialty Steel

6322

​4% to 12% for a period of 5 years

Open upto 29 March 2022

September 2021

120

Based on sales, performance criteria, and Local value addition for a period of five years

To be Announced

Step of Process of Scheme: To Be Announced > Announced > Open Application > Evaluation Stage > Close Application

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