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How the production-linked incentive scheme is galvanising investments into manufacturing

Galvanising investments

According to a piece by former chairman, CCI, Dhanendra Kumar, the production-linked incentive (PLI) scheme to galvanise investments into manufacturing and exports has been a thumping success. The scheme will have GoI distribute $20 billion among eligible manufacturers, and is aimed at remunerating manufacturers for increasing total output incrementally, either for the Indian market or for exports. It will also help foreign companies invest or expand in India, and every new unit they produce will earn them an incentive to expand further. In the process, more job opportunities will be created. GoI, too, will earn extra goods and services (GST) revenues, a net gain estimated at Rs 65,000 crore in mobiles and telecom equipment alone over five years.

When did the scheme begin

GoI had announced the PLI scheme in July 2020 for mobile manufacturing, materials/bulk drugs and medical devices production with a total financial outlay of ?51,311 crore for five years. Later, in November 2020, the scheme was expanded for 10 new sectors with an outlay of ?1,45,980 crore. Incentive has been extended from 4% to 6% on incremental sales over the base year for five years. The PLI scheme is uniquely based on ‘milestone-based incentives’ and is output-oriented. It will enhance India’s manufacturing competitiveness vis-à-vis its peers, result in import substitution, export promotion, cost competitiveness, help infuse new technologies, boost foreign direct investment (FDI), create gainful employment for millions and stimulate MSMEs.


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