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Production-linked Incentive: All you need to know about Modi govt’s ambitious scheme

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Production-linked Incentive: All you need to know about Modi govt’s ambitious scheme


The PLI scheme aims to boost domestic production of goods and is likely to result in manufacturing of $500 billion worth goods in the next five years.

Production-linked Incentive: All you need to know about Modi govt’s ambitious scheme
The Central government’s ambitious Production-linked Incentive (PLI) scheme has increased investment prospects in domestic manufacturing. The scheme has been launched in 13 sectors identified by the government with a total outlay of around Rs 2 lakh crore.
The scheme was first introduced in March 2020 and in her 2021-2022 Budget speech Finance Minister Nirmala Sitharaman announced an outlay of Rs 1.97 lakh crore for the PLI scheme. The scheme is aimed at boosting domestic manufacturing under the Atmanirbhar Bharat initiative of the government. According to the Commerce Ministry, the PLI scheme is expected to boost production worth an estimated $500 billion in five years since its introduction.
What is the PLI scheme?
The Production-linked Incentive is a conventional and popular strategy used by governments to boost the production of goods considered necessary for job creation, social welfare and taxation. PLIs are essentially financial incentives for businesses to augment their output. They could come in the form of tax rebates, lowered import and export duties or easier land acquisition norms.
The benefits of a PLI scheme are generally passed on to the end consumers of goods in the form of lower costs.
For instance, the PLI scheme for large-scale electronics manufacturing in India offers  incentive to promote domestic manufacturing and draw significant investments in mobile phone manufacturing and distinctive electronic components like the ATMP units.
The scheme will have a huge positive impact on the electronics manufacturing segment and will support the country to establish itself as a global leader in the segment.
Similarly, while electric vehicles (EVs) do not have an immediate demand, a shift to greener vehicles is necessary for the country's future. The government has a programme called the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme to drive the adoption of electric-powered vehicles.
There are numerous benefits for EV manufacturers under this scheme including a direct subsidy to consumers who purchase an EV.
Some of the identified sectors for PLI scheme are electronic or technology products, high-efficiency solar modules, specialty steel, pharmaceutical drugs, telecom & networking products, food products, automobile and auto components, textile manufacturing and advanced chemistry cell battery.
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