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Daily News Analysis

Production-linked incentive scheme

12th November, 2020 Schemes

Context: The government unveiled a production-linked incentive scheme to encourage domestic manufacturing investments in ten more sectors, with an estimated outlay of about ₹1.46 lakh crore over the next five years.

  • New categories: The ten sectors, had been identified on the basis of their potential to create jobs and make India self-reliant, include food processing, telecom, electronics, textiles, speciality steel, automobiles and auto components, solar photo-voltaic modules and white goods such as air conditioners and LEDs.
  • Earlier, the government had announced a production linked incentive or PLI scheme for medical devices, mobile phones and specified active pharmaceutical ingredients, with a proposed outlay of ₹51,311 crore.
  • New Additions: Complex generics, anti-cancer and diabetic drugs, in-vitro diagnostic devices and special empty capsules are added to PLI schemes for medicines.
  • Criteria’s of sectors adoption: The selection of sectors has been based on job creation, [linkages with] the global value chain, the sunrise sectors and the larger principle of self-reliant India,”
  • Applications to avail the benefits will be vetted by an Empowered Finance Committee, following which they will be taken up to the Cabinet for final approval.
  • A window has also been kept open for new sectors to be included in the PLI scheme after acquiring a fresh approval from the Cabinet.
  • Expected outcomes:
    • Will make Indian manufacturers globally competitive,
    • attract investment in the areas of core competency and cutting-edge technology;
    • ensure efficiencies;
    • create economies of scale;
    • enhance exports and make India an integral part of the global supply chain.