Production Linked Incentive (PLI) Schemes

Context:

The central government has disbursed incentive amount of Rs 4,415 crore under its flagship Production-Linked Incentive (PLI) schemes for as many as eight sectors.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. Production-Linked Incentive (PLI) Scheme Update
2. Production Linked Incentive (PLI) Scheme Overview
3. Performance Evaluation of PLI Schemes

Production-Linked Incentive (PLI) Scheme Update:

• The central government has released Rs 4,415 crore under the PLI schemes across eight sectors until October this fiscal year.
• Disbursements for FY24 reached Rs 1,515 crore, compared to Rs 2,900 crore in the previous fiscal.
• The government aims to achieve a total disbursal of Rs 11,000 crore by the end of this fiscal.
• Over 6.78 lakh jobs, both direct and indirect, have been generated through the PLI schemes.
• With 746 approved applications in 14 sectors, the expected investment stands at over Rs 3 lakh crore.
• Notably, 176 MSMEs are among the PLI beneficiaries, especially in sectors like pharma and telecom.

Production Linked Incentive (PLI) Scheme Overview:

• The PLI Scheme, or Production Linked Incentive Scheme, is a government initiative in India.
• It operates as a performance-linked incentive, offering companies incentives based on incremental sales from domestically manufactured products.
• The primary goals include boosting the manufacturing sector and reducing dependence on imports.
• The scheme has the potential to significantly enhance production, employment, and overall economic growth over the next few years.
• In 2021, the government announced PLI schemes worth Rs 1.97 lakh crore for 13 key sectors, spanning auto components, electronics, pharmaceuticals, textiles, and more.
• These schemes are at various stages of implementation, with the aim of positively impacting the Micro, Small & Medium Enterprises (MSME) ecosystem in the country.

Performance Evaluation of PLI Schemes:

Positive Outcomes:

• Mobile Handset Exports: India doubled the value of mobile handset exports in FY22 to Rs 45,000 crore compared to FY21. FY23 estimates indicate further growth, with an expected export value of Rs 90,000 crore.
• Pharma Industry: India is now manufacturing 35 active pharmaceutical ingredients (APIs) domestically, reducing reliance on imports and showcasing self-sufficiency.

Export Achievements:

• PLI schemes have contributed to exports surpassing Rs 3.2 lakh crore, with notable contributions from electronics, pharma, food processing, and telecom sectors.

Challenges and Slow Implementation:

• Implementation Challenges: The implementation of PLI schemes has been slow, and certain large-ticket industries have been slow to adopt or commence major activities under the scheme.
• Incentive Payouts: The government spent only Rs 10 crore in incentive payouts in 2021-22 for mobile handsets, white goods, and food processing combined. This increased to Rs 2,874 crore in 2022-23.
• Job Creation: The slow start has resulted in lower job creation than projected. Out of the projected 6 million new jobs over seven years, only around 300,000 jobs (5% of the total) were created between 2020 and early-2023 through various PLIs.

-Source: Indian Express