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Production-Linked Incentive (PLI) Scheme

Context:

The Department of Telecommunications (DoT) has extended the production-linked incentive (PLI) scheme for telecom by one year, and has amended the scheme to raise the incentive rate by an additional 1 per cent, aimed towards incentivising design-led manufacturing in the sector.

Relevance:

GS III- Indian Economy

Dimensions of the Article:

  1. Details
  2. What is a Production Linked Incentive (PLI) scheme?
  3. About the 13 PLI schemes in India
  4. What are the incentives under the amended telecom PLI?

Details:

  • The amendment comes days after the country took its first step towards 5G rollout as the Union Cabinet cleared a proposal to invite applications for spectrum auctions.
  • With the objective to build a strong ecosystem for 5G, the Union Budget 2022-23 has proposed to launch a scheme for design-led manufacturing as part of the existing PLI scheme.
  • After consultations with stakeholders, the guidelines for the PLI Scheme for Telecom & Networking Products have been amended to introduce design-led manufacturing with additional incentive rates.

What is a Production Linked Incentive (PLI) scheme?

  • A Production-Linked Incentive, or PLI scheme, provides incentives to companies in order to boost domestic manufacturing.
  • This is done by the government in an effort to make products more competitively priced, reduce a country’s dependence on imports and generate employment.
  • According to experts, the idea of PLI is important as the government cannot continue making investments in these capital intensive sectors as they need longer times for start giving the returns. Instead, what it can do is to invite global companies with adequate capital to set up capacities in India.

About the 13 PLI schemes in India

  • The objective is really to make India more compliant with our WTO (World Trade Organisation) commitments and also make it non-discriminatory and neutral with respect to domestic sales and exports.
  • Finance Minister announced an outlay of INR 1.97 Lakh Crores for the Production Linked Incentive (PLI) Schemes across 13 key sectors, to create national manufacturing champions and generate employment opportunities for the country’s youth.
    • Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs): Department of Pharmaceuticals
    • Large Scale Electronics Manufacturing: Ministry of Electronics and Information Technology
    • Manufacturing of Medical Devices: Department of Pharmaceuticals
    • Electronic/Technology Products: Ministry of Electronics and Information Technology
    • Pharmaceuticals drugs: Department of Pharmaceuticals
    • Telecom & Networking Products: Department of Telecommunications
    • Food Products: Ministry of Food Processing Industries
    • White Goods (ACs & LED): Department for Promotion of Industry and Internal Trade
    • High-Efficiency Solar PV Modules: Ministry of New and Renewable Energy
    • Automobiles & Auto Components: Department of Heavy Industry
    • Advance Chemistry Cell (ACC) Battery: Department of Heavy Industry
    • Textile Products: MMF segment and technical textiles: Ministry of Textiles
    • Specialty Steel: Ministry of Steel

What are the incentives under the amended telecom PLI?

  • The design-led manufacturing scheme is open for both medium and small-scale enterprises (MSMEs) and non-MSMEs, including domestic and global companies.
  • The DoT also said applications for design-led manufacturing will be prioritised over other manufacturers.
  • The scheme requires an investment threshold of Rs 10 crore for MSMEs and Rs 100 crore for non-MSMEs, excluding land and building cost.
  • The Centre will provide additional incentives of over Rs 4,000 crore under the amended scheme.
  • The incentives will be based on incremental sales of the manufactured goods, and range between 4 per cent to 7 per cent for different categories over the years.
  • MSMEs will get an additional 1 per cent incentive in the first, second, and third years.
  • The DoT has also approved 11 new telecom and network products to the existing list of products that can be manufactured under the scheme.

-Source: Indian Express


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November 2022
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