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Production Linked Incentive Scheme (PLI Scheme)

PLI Scheme is a popular abbreviation the of Production Linked Incentive Scheme. PLI Schemes were launched in various sectors to boost manufacturing and promote self-sufficiency.
authorImageDeeksha Dixit21 Nov, 2024
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PLI Scheme

PLI Scheme: The Production Linked Incentive (PLI) Scheme is a significant government initiative aimed at boosting India's manufacturing sector. The ultimate aim of the PLI Scheme is to promote local manufacturing and reduce dependency on imports.

This scheme was launched in March 2020 as part of the Atmanirbhar Bharat initiative to strengthen domestic industries and make India a global manufacturing hub. Keep reading to learn more about the PLI Scheme, its objectives, and the list of sectors covered by it.

What is the PLI Scheme?

The PLI Scheme full form is the ‘Production Linked Incentive Scheme’. It is a policy designed to offer financial incentives for manufacturing in India. These incentives are linked to production levels, incremental sales, and local value addition, calculated as a percentage of revenue over up to 5 years. The PLI Scheme not only supports existing manufacturers but also attracts global players to set up production units in India. By offering subsidies or bonuses based on production, it aims to attract investments and enhance the global competitiveness of Indian industries. For example, the PLI Scheme for the National Programme on High Efficiency Solar PV Modules aims to develop manufacturing capacity at the giga-watt (GW) scale for high-efficiency solar PV modules.

Objective of PLI Scheme

The primary objective of the PLI Scheme is to make India self-reliant by strengthening domestic manufacturing. Production Linked Incentive scheme now focuses on:
  • Boost Local Manufacturing: Encouraging Indian companies to expand production capacities by ensuring operational efficiencies.
  • Attract Global Investments: Drawing international companies to establish manufacturing units in India.
  • Reduce Import Dependence: By removing sectoral disabilities, developing a comprehensive ecosystem for components, and creating economies of scale.
  • Create Employment Opportunities: Generating jobs across various skill levels.
  • Enhance Exports: Making India a key player in global supply chains.
In short, the scheme aims to position India as a global manufacturing powerhouse while supporting economic growth and innovation.

List of Sectors Under PLI Scheme

In its initial phase, the PLI Scheme was launched in three industries. Now it covers 14 sectors which are:
  1. Mobile Manufacturing and Specified Electronic Components
  2. Critical Key Starting Materials/Drug Intermediaries & Active Pharmaceutical Ingredients.
  3. Manufacturing of Medical Devices
  4. Automobiles and Auto Components
  5. Pharmaceuticals Drugs
  6. Specialty Steel
  7. Telecom & Networking Products
  8. Electronic/Technology Products
  9. White Goods (ACs and LEDs)
  10. Food Products
  11. Textile Products: MMF segment and technical textiles
  12. High efficiency solar PV modules
  13. Advanced Chemistry Cell (ACC) Batteries
  14. Drones and Drone Components.

Benefits of PLI Scheme

The PLI Scheme offers numerous advantages, both for the economy and individual sectors. Here are some of its key benefits:
  • Promotes Domestic Manufacturing: Reduces reliance on imports by boosting local production. For example, by FY 2022-23, mobile phone imports reduced to USD 1.6 billion from USD 3.6 billion in FY 2017-18.
  • Encourages Technological Advancements: Supports innovation by incentivizing research and development.
  • Creates Employment Opportunities: Generates jobs in manufacturing, supply chains, and ancillary industries.
  • Enhances Global Competitiveness: Positions India as an attractive investment destination.
  • Strengthens Supply Chains : Improves self-reliance in critical sectors like pharmaceuticals and electronics.
  • Drives Economic Growth: Contributes to GDP by increasing industrial output and exports.
  • Supports Green Initiatives : Encourages investment in renewable energy and sustainable technologies.

UPSC PYQ on PLI Scheme

UPSC Prelims 2023: Consider, the following statements
  • Statement I: India accounts for 3.2% of the global export of goods.
  • Statement II : Many local companies and some foreign companies operating in India have taken advantage of India's ‘Production-linked Incentive’ scheme.
Which one of the following is correct in respect of the above statements? (a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I (b) Both Statement I and Statement II are correct and Statement II is not the correct explanation for Statement I (c) Statement I is correct but Statement II is incorrect (d) Statement I is incorrect but Statement II is correct
The PLI Scheme is a transformative step towards strengthening India's manufacturing sector and achieving self-reliance. By promoting domestic industries, attracting investments, and creating jobs, it significantly contributes to the nation’s economic development.

To learn more about government schemes, check out Physics Wallah’s UPSC Courses!

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PLI Scheme FAQs

What is the Production Linked Incentive scheme?

The PLI Scheme offers financial incentives to boost manufacturing in India, linked to production levels.

How many sectors are covered under the PLI scheme?

The scheme currently covers 14 key sectors, including electronics, pharmaceuticals, renewable energy, and textiles.

What are the objectives of the PLI scheme?

The objectives include enhancing manufacturing competitiveness, attracting investments, creating jobs, and integrating India into global supply chains.

Which ministry is responsible for the Production Linked Incentive Scheme?

Various ministries such as the Ministry of Commerce and Industry and Ministry of Electronics and Information Technology are responsible for the PLI Scheme based on the sector.

Who can benefit from the PLI Scheme?

Both domestic and international manufacturers operating in eligible sectors can benefit from the scheme.
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