PLI scheme

Context: The Production Linked Incentive (PLI) program for the automobile sector has been extended by one year through March 2028. 

News:

• The extension of the original five-year scheme, initially covering the period from 2022-23 to 2026-27, will remain effective until 2027-28.
• This extension provides companies with additional time to capitalize on the Production-Linked Incentive (PLI) fund amounting to Rs 25,938 crore, aimed at enhancing domestic manufacturing and exports.
• In cases where participants fall short of meeting the specified year-on-year growth criteria for payouts in a given fiscal year, they remain eligible for incentives in the subsequent year if targets are accomplished. This provision safeguards serious investors who prioritize upfront capacity installation.
• Furthermore, achieving targets for five out of the six years is deemed sufficient to qualify for subsidies overall.

About :

• The Production Linked Incentive Scheme (PLI) was devised with the aim of enhancing domestic manufacturing capabilities, fostering higher import substitution, and generating employment opportunities.
• Launched in March 2020, the scheme initially focused on three industries: Mobile and allied Component Manufacturing, Electrical Component Manufacturing, and Medical Devices. Subsequently, its scope was expanded to include 14 sectors.

• Under the PLI scheme, both domestic and foreign companies receive financial incentives for engaging in manufacturing activities in India, with the rewards calculated as a percentage of their revenue over a period of up to five years.
• The targeted sectors encompass mobile manufacturing, medical devices, automobiles and auto components, pharmaceuticals, drugs, specialty steel, telecom & networking products, electronic products, white goods (ACs and LEDs), food products, textile products, solar PV modules, advanced chemistry cell (ACC) battery, and drones and drone components.
• Incentives are granted based on incremental sales, and for certain sectors like advanced chemistry cell batteries, textile products, and the drone industry, calculations take into account sales, performance, and local value addition over the five-year period.
• The PLI scheme places a significant emphasis on Research and Development (R&D) investment, enabling the industry to stay abreast of global trends and maintain competitiveness in the international market.