PLI scheme offers incentives on incremental sales for products manufactured in India. The first three PLI schemes were approved in March 2020 followed by 10 new schemes which were notified in November of which six were approved later.
The 2021-22 budget has an outlay of INR 1.97 Lakh Crores for the Production-Linked Incentive (PLI) scheme for 13 identified sectors. The scheme, which aimed to boost domestic manufacturing under the government’s “Atmanirbhar Bharat” initiative, was introduced in March last year and is expected to result in a minimum production worth more than $500 billion in five years, according to Commerce Ministry. Till early April, the PLI scheme for nine sectors was approved by the Cabinet.
The scheme provides incentives to companies for enhancing their domestic manufacturing apart from focusing on reducing import bills and improving the cost competitiveness of local goods. PLI scheme offers incentives on incremental sales for products manufactured in India. The first three PLI schemes were approved in March last year followed by 10 new schemes which were notified in November of which six were approved later. The scheme for respective sectors has to be implemented by the concerned ministries and departments. According to a Cabinet statement in November last year, savings, if any, from one PLI scheme of an approved sector can be utilized to fund the scheme for another approved sector.
The nine sectors for which the scheme has already been approved included electronic or technology products (Rs 5,000 crore outlay for 5 years), pharmaceuticals drugs (Rs 15,000 crore), telecom & networking products (Rs 12,195 crore), food Products (Rs 10,900 crore), high-efficiency solar PV modules (Rs 4,500 crore), etc. The other four sectors under PLI awaiting Cabinet approval were automobiles & auto components, Advanced Chemistry Cell (ACC) battery, textiles, and specialty steel.
Eligibility criteria for businesses under the PLI scheme vary based on the sector approved under the scheme. the eligibility for telecom units is subject to the achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods. The minimum investment threshold for MSME is Rs 10 crore and Rs 100 crores for others.
An incentive of 4-6 percent was offered last year on mobile and electronic components manufacturers such as resistors, transistors, diodes, etc. The Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing offers an incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking, and Packaging (ATMP) units. The Scheme would tremendously boost the electronics manufacturing landscape and establish India at the global level in the electronics sector.
The scheme shall extend an incentive of 4% to 6% on incremental sales (over the base year) of goods manufactured in India and covered under target segments, to eligible companies, for a period of five years after the base year as defined.
The Scheme is open for applications for 4 months initially which may be extended. Support under the Scheme shall be provided for five years after the base year
The Scheme will be implemented through a Nodal Agency which shall act as a Project Management Agency (PMA) and be responsible for providing secretarial, managerial, and implementation support and carrying out other responsibilities as assigned by MeitY from time to time.
Second Round of the Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing.
After the success of the First Round of Production Linked Incentive Scheme in attracting investments in mobile phone and electronic component manufacturing, the proposal for accepting applications under the Second Round of the PLI Scheme has been approved by the Competent Authority. The target segment for this round shall be Specified Electronic Components.
Under the Second Round, incentives of 3% to 5% shall be extended on incremental sales (over base year i.e., 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for four years.
The Application Window shall be open until 31.03.2021 initially and may be extended and/or reopened based on the response from the industry. Incentives under the Second Round of the PLI Scheme shall be applicable from 01.04.2021.