Government Approves PLI Scheme Worth 2 Lakh Crore
(Production-Linked Incentive (PLI) Scheme)
The Union Cabinet on 11 November 2020 gave its approval for production-linked incentives (PLI) for 10 more sectors, to boost the ‘Make in India’ and ‘Aatmanirbhar mission’ program. Information and Broadcasting Minister Prakash Javadekar along with finance minister Nirmala Sitharaman announced the decision of the Union Cabinet.
The PLI scheme will cover sectors such as white goods manufacturing, pharmaceutical, specialized steel, auto, telecom, textile, food products, solar photovoltaic, and cell battery. Among sectors, auto components and automobile sectors have received the maximum incentive of ₹57,000 crores. The PLI scheme now offers a 4-6% incentive to eligible electronic companies for mobile phones and electronic components such as printed circuit boards, sensors, among others for five years. Rajiv Kumar, Niti Aayog Vice-Chairman had announced last month that the government would introduce the PLI scheme for additional sectors to boost domestic manufacturing.
The Sectors Include:
Food processing,
Telecom,
Electronics,
Textiles,
Speciality steel,
Automobiles and auto components,
Solar photo-voltaic modules
White goods, such as air conditioners and LEDs.
Automobile industry will be the biggest beneficiary of the government’s Production Linked Incentive (PLI) scheme, Federation of Automobile Dealers Associations (FADA) has said.
Welcoming the announcement by the government to give 2 lakh crore worth production-linked incentives for 10 sectors to boost domestic manufacturing, FADA said the step will also make the Indian auto industry more competitive globally, improve export and will make production better in economies of scale.
“Automobile Industry will be the biggest beneficiary with 57,042 crore outlay over next 5 years and out of the 10 key chosen sectors,” FADA President Vinkesh Gulati said in a statement.
Various production-linked-incentive (PLI) schemes for electronics will lead to a minimum incremental production of 10.5 lakh crore over the next four financial years, and around 6.5 lakh crore’s worth will be exported, said Ajay Prakash Sawhney, secretary, Ministry of Electronics and Information Technology (MEITY). Sawhney, who gave an interview to Rajya Sabha TV earlier this week, also indicated that a policy or strategy, surrounding data centre infrastructure for artificial intelligence (AI), is on the cards and will be unveiled soon.
The focus of the scheme is usually on indigenous manufacturing and increase exports, though in the case of Solar PV and batteries, it will definitely be self-sufficiency and import substitution also. A total of 1.45 lakh crore has been earmarked for the scheme over a five-year period. Applications for the scheme will be appraised by the Expenditure Finance Committee (EFC), and approved by the Cabinet.
The PLI Scheme is a Central Government scheme that was originally notified in April 2020 for Large Scale Electronics Manufacturing to provide financial incentives for domestic manufacturing of goods and also to attract large investments. The scheme did well enough for an expanded roll out to pharma sector later.
The scheme usually provides a 4 to 6 percent incentive on incremental sales (over base year, 2019-20) to eligible companies for manufacturing goods for 5 years period, subsequent to the base year.
For the Advanced Chemistry Cell (ACC) battery sector, the outlay is an impressive 18,100 crores. ACC batteries are rechargeable batteries than can be used in consumer electronics, electric vehicles and renewable energy. The implementing agency here is going to be Niti Ayog.
The Solar PV manufacturing sector, there is a 4,500 crore outlay. The cabinet noted the ‘strategic’ nature of the sector, and the need to make solar supply chains more resilient. The PLI incentive should nudge quite a few plans to move from the planning stage to execution now, with the MNRE as the implementing agency.