The production-linked incentive schemes to boost manufacturing in India in order to make it a manufacturing & export hub.
In the latest set of incentives, the Indian government launched production-linked incentive (PLI) schemes for electronics, pharma, and medical equipment. What are these schemes and how will the country benefit from these?
PLI for large scale electronics manufacturing
The Ministry of Electronics & Information Technology (MeitY) launched this incentive program in April 2020, as part of the National Policy of Electronics. The scheme offers a production linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components.
What the scheme says
The scheme would give an incentive of 4% to 6% on incremental sales for mobile phones and electronic components manufactured in India for a period of five years. In the same category, incentives for the domestic companies (owned by Indian nationals) manufacturing the goods have been kept at ₹200 crore for the next four years.
The scheme will be active for five years with financial year (FY) 2019–20 considered as the base year for calculation of incentives.
The Union Minister for Information Technology and Communications Ravi Shankar Prasad on August 1 had said under the said scheme, around 22 companies have shown interest to produce mobile phones and components in India worth ₹11.5 lakh crores in the coming five years, out of which products worth ₹7 lakh crores will be exported. He also added that these manufacturing units will create three lakh direct and around nine lakh indirect jobs.
As per news reports, South Korea’s Samsung may potentially be next on the line after Apple, which is looking to shift a part of its smartphone production lines to India from Vietnam. Other global electronic giants like Pegatron, Flex, Wistron have also shown interest in the scheme.
PLI for local manufacturing of medical devices and drugs
To boost domestic drug manufacturing and attract large investments in the pharma sector, the Department of Pharmaceuticals notified production-linked incentive schemes in July.
The incentive schemes are for local manufacturing of active pharmaceutical ingredients (APIs) and medical devices as well as promoting bulk drug products in the country.
*An API is the active ingredient contained in a medicine i.e., the part of medicine that is responsible for its curative action.
The aim behind coming up with such PLI schemes is to promote Atmanirbhar Bharat and ‘Make in India’ programme, and grow the share of manufacturing in the economy with long-term benefits across many sectors. Looks like the country is in a reasonable chance to gain from the supply chain operations.
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