• GDV Consultancy

Production Linked Incentive Scheme (PLI)

Updated: Apr 14


On 21 Mar 2020

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has approved the following schemes:

Sector A: The Production Incentive Scheme (PLI) for Large Scale Electronics Manufacturing

Sector B: The Production Linked Incentive (PLI) Scheme for promoting domestic manufacturing of medical devices with financial implications of Rs. 3,420 crore.


Sector A: The Production Incentive Scheme (PLI) for Large Scale Electronics Manufacturing

The total cost of the proposed scheme is approximately INR 40,995 crore (Rupees Forty Thousand Nine Hundred and Ninety-Five Crore Only) which includes an incentive outlay of approximately INR 40,951 crore (Rupees Forty Thousand Nine Hundred and Fifty-one Crore Only) and administrative expenses to the tune of INR 44 crore (Rupees Forty-Four Crore Only).

The scheme proposes production linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components including Assembly, Testing, Marking and Packaging (ATMP) units.

The Scheme shall extend an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India and covered under target segments, to eligible companies, for a period of five (5) years subsequent to the base year as defined.


Impacts:

The scheme has a direct employment generation potential of over 2,00,000 jobs over 5 years. However, it is expected that the scheme would lead to large scale electronics manufacturing in the country and open tremendous employment opportunities. Indirect employment will be about 3 times of direct employment as per industry estimates. Thus, total employment potential of the scheme is approximately 8,00,000.

Result:

The scheme was open for filing applications till 31.07.2020. Incentives are applicable under the scheme from 01.08.2020.

A total of 22 companies have filed their application under the PLI Scheme. The international mobile phone manufacturing companies that have applied under Mobile Phone (Invoice Value INR 15,000 and above) Segment are Samsung, Foxcon Hon Hai, Rising Star, Wistron and Pegatron. Out of these, 3 companies namely Foxcon Hon Hai, Wistron and Pegatron are contract manufacturers for Apple iPhones. Apple (37%) and Samsung (22%) together account for nearly 60% of global sales revenue of mobile phones and this scheme is expected to increase their manufacturing base manifold in the country.

Under Mobile Phone (Domestic Companies) Segment, Indian companies including Lava, Dixon Technologies, Bhagwati (Micromax), Padget Electronics, Sojo Manufacturing Services and Optiemus Electronics have applied under the scheme. These companies are expected to expand their manufacturing operations in a significant manner and grow into national champion companies in mobile phone production. 10 companies have filed applications under the Specified Electronic Components Segment which include AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, Vitesco and Neolync.

16 companies are approved under the Specified Electronic Components Segment which include AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, and Neolync.


Sector B: The Production Linked Incentive (PLI) Scheme for promoting domestic manufacturing of medical devices with financial implications of Rs. 3,420 crore.

The Medical Device sector suffers from a cost of manufacturing disability of around 12% to 15%, vis-a-vis competing economies, among other things, on account of lack of adequate infrastructure, domestic supply chain and logistics, high cost of finance, inadequate availability of quality power, limited design capabilities and low focus on R&D and skill development, etc. There is, thus, a need for a mechanism to compensate for the manufacturing disability.

The Scheme aim to boost domestic manufacturing by attracting large investments in medical device sector. Under the Scheme, incentive @ 5% of incremental sales over base year 2019-20 will be provided on the segments of medical devices identified under the Scheme.

The expenditure to be incurred for the above schemes will be for the next five years i.e. from 2020- 21 to 2024-25

Implementation:

The target for PLI Scheme is to provide assistance to about 25-30 manufacturers under the following categories of medical devices: -

a. Cancer care/Radiotherapy medical devices,

b. Radiology & Imaging medical devices (both ionizing & non-ionizing radiation products) and Nuclear Imaging Devices,

c. Anesthetics & Cardio-Respiratory medical devices including Catheters of Cardio Respiratory Category & Renal Care Medical Devices and

d. AII Implants including implantable electronic devices like Cochlear Implants and Pacemakers.

Impacts:

The PLI Scheme for promoting domestic manufacturing of Medical Devices would boost domestic manufacturing and attract large investments in the medical device sector, particularly in the identified target segments. It will lead to expected incremental production of Rs. 68,437 crore over a period of five years. The Schemes will lead to generation of additional employment of 33,750 jobs over a period of five years.

The Schemes will lead to substantial reduction in import of target segments of medical devices.

Result:

Production Linked Incentive(PLI) Scheme for Bulk Drugs and PLI Scheme for Medical Device shave shown a very positive response from the pharmaceutical as well as the medical device industry. The industry has shown a very good response to these schemes whereby 215 applications made by 83 pharmaceutical manufacturers have been received under the PLI

Scheme for bulk drugs. Similarly, 28 applications made by 23 medical device manufacturers have been received under the PLI Scheme for medical devices. The closing date of applications was 30.11.2020. IFCI Ltd. is the Project Management Agency (PMA) for implementation of both the schemes.

The appraisal process of the applications will commence from today onwards and a maximum of 136 applications under the PLI scheme for bulk drugs and a maximum of 28 applications under the PLI scheme for medical devices will be approved. The time duration for giving approval to the applicants is 90 days under the PLI scheme for bulk drugs and 60 days under the PLI scheme for medical devices. However, best efforts will be done by the PMA and the Department of Pharmaceuticals to give early approvals to the participants under the scheme



On 21 June 2020

Union Minister for Chemicals and Fertilizers launched schemes of Department of Pharmaceuticals for promotion of domestic manufacturing of bulk drugs:

Sector C: Production Linked Incentive (PLI) Scheme for promotion of domestic manufacturing

of critical Key Starting Materials (KSMs)/ Drug Intermediates(DIs) and Active

Pharmaceutical Ingredients (APIs) In India


India is often referred to as ‘the pharmacy of the world’ and this has been proved true especially in the ongoing Covid-19 pandemic when India continued to export critical life saving medicines to needy countries even during the countrywide lockdown. However, despite these achievements, it is a matter of concern that our country is critically dependent on imports for basic raw materials, viz. Bulk Drugs (Key Starting Materials (KSMs)/ Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs)) that are used to produce some of the essential medicines.

The scheme intends to boost domestic manufacturing of identified KSMs, Drug Intermediates and APIs by attracting large investments in the sector and thereby reduce India’s import dependence in critical APIs

Implementation:

Support under the scheme shall be provided only to manufacturers of critical KSMs/DIs and APIs registered in India. The scheme is applicable only for greenfield projects.

I. Fermentation based KSMs/Drug Intermediates

1. Penicillin G

3. Erythromycin Thiocynate (TIOC)

2. 7-ACA

4. Clavulanic Acid

II. Fermentation based niche KSMs/Drug Intermediates/APIs

5. Neomycin

10. Rifampicin

6. Gentamycin

11. Vitamin B1

7. Betamethasone

12. Clindamycin Base

8. Dexamethasone

13. Streptomycin

9. Prednisolone

14. Tetracycline

III. Key Chemical Synthesis based KSMs/Drug Intermediates

15. Cyclohexane Diacetic Acid (CDA)

17. Dicyandiamide (DCDA)

16. 2-Methyl-5Nitro-Imidazole (2-MNI)

18. Para amino phenol

IV. Other Chemical Synthesis based KSMs/Drug Intermediates/APIs

19. Meropenem

31. Aspirin

20. Atorvastatin

32. Diclofenac Sodium

21. Olmesartan

33. Levetiracetam

22. Valsartan

34. Carbidopa

23. Losartan

35. Ritonavir

24. Levofloxacin

36. Lopinavir

25. Sulfadiazine

37. Acyclovir

26. Ciprofloxacin

38. Carbamazepine

27. Ofloxacin

39. Oxcarbazepine

28. Norfloxacin

40. Vitamin B6

29. Artesunate

41. Levodopa

30. Telmisartan


Financial incentive under the scheme shall be provided on sales of 41 identified products for six (06) years at the rates. For fermentation based products, incentive for FY 2023-24 to FY 2026-27 would be 20%, incentive for 2027-28 would be 15% and incentive for 2028-29 would be 5%. 4.2. For chemical synthesis based products, incentive for FY 2022-23 to FY 2027-28 would be 10%.

The list of 41 products contained in the scheme guidelines will enable domestic production of 53 bulk drugs. Financial incentives will be given to a maximum of 136 manufacturers selected under the scheme as a fixed percentage of their domestic sales of these 41 products manufactured locally with required level of domestic value addition

Impacts:

Total financial outlay of the scheme is Rs. 6,940 crore.

Result:

The applications under four different Target Segments were invited with 30th November, 2020 as the last date. In total, 215 applications have been received for the 36 products spread across the 4 Target Segments. The guidelines prescribed that the applications would be processed and decided within a period of 90 days, i.e., up to 28th February, 2021.

The Target Segment-I includes 4 Eligible Products, viz., Penicillin G; 7-ACA; Erythromycin Thiocyanate (TIOC) & Clavulanic Acid, in which the country is presently fully import dependent, were considered on priority as per the decided evaluation and selection criteria.

S.No.

Name of approved Applicant

Name of Eligible Product

Committed Production Capacity (in MT)

Committed Investment (in Rs. crores)

1

M/s Aurobindo Pharma Limited (through LyfiusPharmaPvt. Ltd.)

Penicillin G

15000

1392

2

M/s Karnataka Antibiotics & Pharmaceuticals Ltd.

7 - ACA

1000

275

3

M/s Aurobindo Pharma Limited (through LyfiusPharmaPvt. Ltd.)

2000

813

4

M/s Aurobindo Pharma Limited (through LyfiusPharmaPvt. Ltd.)

Erythromycin Thiocyanate (TIOC)

1600

834

5

M/s Kinvan Pvt. Ltd.

Clavulanic Acid

300

447.17



On 21 Nov 2020

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval the following schemes:

Sector D: The Production Incentive Scheme (PLI) for Advance Chemistry Cell (ACC) Battery

Sector E: The Production Incentive Scheme (PLI) for Electronic/Technology Products

Sector F: The Production Incentive Scheme (PLI) for Automobiles & Auto Components

Sector G: The Production Incentive Scheme (PLI) for Pharmaceuticals drugs

Sector H: The Production Incentive Scheme (PLI) for Telecom & Networking Products

Sector I: The Production Incentive Scheme (PLI) for Textile Products: MMF segment and technical textiles

Sector J: The Production Incentive Scheme (PLI) for Food Products

Sector K: The Production Incentive Scheme (PLI) for High Efficiency Solar PV Modules

Sector L: The Production Incentive Scheme (PLI) for White Goods (ACs & LED)

Sector M: The Production Incentive Scheme (PLI) for Speciality Steel



Sector D: The Production Incentive Scheme (PLI) for Advance Chemistry Cell (ACC) Battery

ACC battery manufacturing represents one of the largest economic opportunities of the twentyfirst century for several global growth sectors, such as consumer electronics, electric vehicles, and renewable energy. The PLI scheme for ACC battery will incentivize large domestic and international players in establishing a competitive ACC battery set-up in the country.


Implementing Ministry/Department:

NITI Aayog and Department of Heavy Industries



Approved financial outlay over a five year period Rs. Crore:

18100



Product Lines:

ACC Batteries





Sector E: The Production Incentive Scheme (PLI) for Electronic/Technology Products

India is expected to have a USD 1 trillion digital economy by 2025. Additionally, the Government's push for data localization, Internet of Things market in India, projects such as Smart City and Digital India are expected to increase the demand for electronic products. The PLI scheme will boost the production of electronic products in India.


Implementing Ministry/Department

Ministry of Electronics and Information Technology



Approved financial outlay over a five year period Rs. crore

5000



Product Lines

i. Semiconductor Fab

ii. Display Fab

iii. Laptop/ Notebooks

iv. Servers

v. IoT Devices

vi. Specified Computer Hardware


Sector F: The Production Incentive Scheme (PLI) for Automobiles & Auto Components

The automotive industry is a major economic contributor in India. The PLI scheme will make the Indian automotive Industry more competitive and will enhance globalization of the Indian automotive sector.

Implementing Ministry/Department

Department of Heavy Industries



Approved financial outlay over a five year period Rs. crore

57042



Product Lines

Automobile and Auto Components



Sector G: The Production Incentive Scheme (PLI) for Pharmaceuticals drugs

On 24 Feb 2021,

The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved Production Linked Incentive (PLI) Scheme for Pharmaceuticals over a period of Financial Year 2020-21 to 2028-29.

The Indian pharmaceutical industry is the third largest in the world by volume and 14th largest in terms of value. It contributes 3.5% of the total drugs and medicines exported globally. India possesses the complete ecosystem for development and manufacturing of pharmaceuticals and a robust ecosystem of allied industries. The PLI scheme will incentivize the global and domestic players to engage in high value production.

The scheme will be part of the umbrella scheme for the Development of Pharmaceutical Industry. The objective of the scheme is to enhance India's manufacturing capabilities by increasing investment and production in the sector and contributing to product diversification to high value goods in the pharmaceutical sector. One of the further objectives of the scheme is to create global champions out of India who have the potential to grow in size and scale using cutting edge technology and thereby penetrate the global value chains.


Implementing Ministry/Department

Department of Pharmaceuticals



Approved financial outlay over a five year period Rs. crore

15000



Product Lines

Category 1

i. Biopharmaceuticals

ii. Complex generic drugs

iii. Patented drugs or drugs nearing patent expiry

iv. Cell based or gene therapy products

v. Orphan drugs

vi. Special empty capsules

vii. Complex excipients


Category 2

Active Pharma Ingredients (APIs) /Key Starting Materials (KSMs) and /Drug Intermediaries (Dls)


Category 3

i. Repurposed Drugs

ii. Auto-immune drugs, Anti-cancer drugs, Anti diabetic drugs, Anti Infective drugs, Cardiovascular drugs, Psychotropic drugs and Anti-Retroviral drugs

iii. In-vitro Diagnostic Devices (IVDs)

iv. Phytopharmaceuticals

v. Other drugs not manufactured in India

vi. Other drugs as approved


Implementation:

The manufacturers of pharmaceutical goods registered in India will be grouped based on their Global Manufacturing Revenue (GMR) to ensure wider applicability of the scheme across the pharmaceutical industry and at the same time meet the objectives of the scheme. The qualifying criteria for the three groups of applicants will be as follows-

(a) Group A: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods more than or equal to Rs 5,000 crore.

(b) Group B: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods between Rs 500 (inclusive) crore and Rs 5,000 crore.

(c) Group C: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods less than Rs 500 crore. A sub-group for MSME industry will be made within this group, given their specific challenges and circumstances.

Quantum of Incentive: The total quantum of incentive (inclusive of administrative expenditure) under the scheme is about Rs 15,000 crore. The incentive allocation among the Target Groups is as follows:

(a) Group A: Rs 11,000 crore.

(b) Group B: Rs 2,250 crore.

(c) Group C: Rs 1,750 crore.

The incentive allocation for Group A and Group C applicants shall not be moved to any-other category. However, incentive allocated to Group B applicants, if left underutilized can be moved to Group A applicants. Financial Year 2019-20 shall be treated as the base year for computation of incremental sales of manufactured goods.

Impact:

The Scheme will benefit domestic manufacturers, help in creating employment and is expected to contribute to the availability of wider range of affordable medicines for consumers. The scheme is expected to promote the production of high value products in the country and increase the value addition in exports.

Total incremental sales of Rs.2,94,000 crore and total incremental exports of Rs.1,96,000 crore are estimated during six years from 2022-23 to 2027-28. The scheme is expected to generate employment for both skilled and un-skilled personnel, estimated at 20,000 direct and 80,000 indirect jobs as a result of growth in the sector.




Sector H: The Production Incentive Scheme (PLI) for Telecom & Networking Products



Telecom equipment forms a critical and strategic element of building a secured telecom infrastructure and India aspires to become a major original equipment manufacturer of telecom and networking products. The PLI scheme is expected to attract large investments from global players and help domestic companies seize the emerging opportunities and become big players in the export market.

The Production Linked Incentive (PLI) Scheme intends to promote manufacture of Telecom and Networking Products in India and proposes a financial incentive to boost domestic manufacturing and attract investments in the target segments of telecom and networking products in order to encourage Make in India. The scheme will also encourage exports of telecom and networking products 'Made in India'.

Implementing Ministry/Department

Department of Telecom



Approved financial outlay over a five year period Rs. crore

12195



Product Lines

i. Core Transmission Equipment

ii. 4G/5G, Next Generation Radio Access Network and Wireless Equipment

iii. Access & Customer Premises Equipment (CPE), Internet of Things (IoT) Access Devices and Other Wireless Equipment

iv. Enterprise equipment: Switches, Router


Implementation: