In the framework of the Atmanirbhar Bharat Programme, the PLI schemes aim at enhancing Indian manufacturers competitiveness, attracting investments in cutting-edge technology, creating efficiencies and economies of scale as well as enhancing exports.
Production Link Incentive Scheme (PLI) is an initiative started by the Government of India to not only encourage foreign companies to find workforce in the country and thereby generate employment, and also encourage domestic and local production to create micro jobs.
The PLI schemes aim to develop capacities in the local supply chain, introduce new downstream operations, and incentivize investments into high-tech production.
PLIs are essentially the incentives to companies to boost the product. They could be in the form of tax rebates, import and export duty concessions, or maybe easier land acquisition terms. Generally, the benefits of a PLI Scheme are passed on to the final consumers of the goods in terms of lower prices.
Take the example of electric vehicles. They don’t have ready demand but a shift to greener automobile is essential for the country. In this regard, the government has introduced FAME scheme. It stands for Faster Adoption and Manufacturing of Hybrid and Electric Vehicles. Under this scheme there are lot of concessions for EV makers.
How do they spur production of goods?
Say you are the government, and you want to spur production of a certain category of goods. The demand for such goods isn’t all that great. But you think once they are manufactured in large quantities, or sold at the right price points, it should work out fine.
This is where you will employ PLI or a production-linked incentive scheme. The PLI is an old and popular tool with governments to spur production of goods that the country sees as necessary for social good, taxes, or employment-generation reasons.
Products like Auto Components, Automobile, Aviation, Chemicals, Electronic Systems, Food Processing, Medical Devices, Metals & Mining, Pharmaceuticals, Renewable Energy, Telecom, Textile & Apparel, and White Goods come under PLI Scheme.
The companies approved for PLI scheme include Motherson Sumi, Bosch, Maruti Suzuki, Hero MotoCorp, Hero Cycles, Toyota, Bharat Forge, Sona BLW and many more.