Reviewing Production Linked Incentive (PLI) Schemes

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Reviewing Production Linked Incentive (PLI) Schemes Blog Image

What’s in Today’s Article?

  • Why in the News?
  •  About PLI Scheme
  • Performance of PLI Schemes
  • News Summary

Why in News?

  • 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.

About PLI Scheme

  • PLI Scheme, commonly abbreviated as the Production Linked Incentive Scheme, is an initiative started by the Government of India.
  • It is a form of performance-linked incentive to give companies incentives on incremental sales from products manufactured in domestic units.
  • It is aimed at boosting the manufacturing sector and to reduce imports.
  • These schemes have the potential of significantly boosting production, employment and economic growth over the next five years or so.
  • In 2021, the Government had announced Rs 1.97 lakh crore (US$ 28 b) worth of PLI schemes for 13 key sectors. These sectors include:
    • Auto components, Automobile, Aviation, Chemicals, Electronic systems, Food processing, Medical devices, Metals & mining, Pharmaceuticals, Renewable energy, Telecom, Textiles & apparel, White goods
  • These schemes are in various stages of implementation by the implementing Ministries/ Departments.
  • These PLI schemes are expected to have a cascading effect on the country's Micro Small & Medium Enterprises (MSME) ecosystem.

Performance of PLI Schemes

  • Boost in Exports:
    • After doubling the value of mobile handset exports in FY22 to Rs 45,000 crore over FY21, India is estimated to have exported Rs 90,000 crore worth of mobile handsets in FY23.
    • Similarly, in the pharma industry, India is now making 35 active pharmaceutical ingredients (APIs), which we used to import from countries like China. As a result, India’s imports have come down.
    • These schemes have witnessed exports surpassing Rs 3.2 lakh crore, with significant contributions from sectors such as electronics, pharma, food processing, and telecom.
  • Slow Implementation:
    • Implementation of the PLI schemes has been slow so far.
    • In 2021-22, the government spent just Rs 10 crore in incentive payouts (for mobile handsets, white goods—ACs and LEDs—and food processing industries put together), reflecting marginal increase in production.
    • In 2022-23, as per DPIIT, this number rose to Rs 2,874 crore.
    • Effectively, the first two years of the seven-year exercise saw a mere 1.46 per cent of the total Rs 1.97 lakh crore incentive outlay being paid out.
    • Large-ticket industries are either yet to adopt the scheme or begin major activities under it.
  • Lower Number of Jobs Created:
    • The slow start has also meant lower number of jobs created.
    • Against the projected 6 million new jobs over seven years, only some 300,000 jobs (or 5 per cent of the total) have been created between 2020 and early-2023 through the various PLIs.

News Summary

  • 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 sector still October this fiscal year.
    • About Rs 1,515 crore was disbursed in FY24 till October, while it was Rs 2,900 crore in 2022-23, when payments under the scheme commenced.
    • By end of this fiscal, the disbursal target is Rs 11,000 crore.
  • The government said that employment generation, both direct and indirect, is over 6.78 lakh.
  • As on date, 746 applications have been approved in 14 sectors with expected investment of over Rs 3 lakh crore.
  • About 176 MSMEs are among the PLI beneficiaries in sectors such pharma, and telecom.

Q1) What is a wafer in a semiconductor?

 In electronics, a wafer is a thin slice of semiconductor, such as a crystalline silicon, used for the fabrication of integrated circuits and, in photovoltaics, to manufacture solar cells. The wafer serves as the substrate for microelectronic devices built in and upon the wafer.

Q2) What is MSME concept and definition?

The Micro, Small and Medium Enterprises (MSMEs) support industries as ancillary units, thereby contributing enormously to the overall industrial development of the country. These enterprises are engaged in the production, manufacturing and processing of goods and commodities.

Source: Govt disburses Rs 4,415 crore under PLI scheme; low job creation a concern | Indian Express