Government approves Rs 1.46 lakh crore PLI scheme for 10 sectors; here are the details

The Union Cabinet approved the Production-Linked Incentive (PLI) scheme for 10 sectors on November 11. These are pharmaceuticals, automobiles and auto components, telecom and networking products, advanced chemistry cell battery, textile, food products, solar modules, white goods, and specialty steel.

"The PLI scheme across these 10 key specific sectors will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology, ensure efficiencies, create economies of scale, enhance exports, and make India an integral part of the global supply chain," according to a government statement.

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The total allocation under PLI would be Rs 1.46 lakh crore over five years, according to the government statement.

Moneycontrol had reported in September that some of the sectors that the government was considering to extend PLIs to may include specialised pharmaceutical product makers, textile units, food processing plants, solar panel makers, and automobile components manufacturing.

"The policy that we are taking in the PLI, through which we want the manufacturers to come into India, is clearly to say we want to build our strength but yet link with the global value chains. India should become a manufacturing hub is always been the call by our honourable prime minister," Finance Minister Nirmala Sitharaman said while addressing a press briefing after the Cabinet decision.

The PLI scheme will be implemented by the concerned ministries/ departments and will be within the overall financial limits prescribed, she said.

"The final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet. Savings, if any, from one PLI scheme of an approved sector can be utilized to fund that of another approved sector by the Empowered Group of Secretaries. Any new sector for PLI will require fresh approval of the Cabinet," the statement said.

In order to reduce India's dependence on China, the government has earlier made 53 bulk drugs eligible for a PLI worth Rs 6,940 crore. The scheme is expected to benefit up to 136 manufacturing units, generating incremental sales of Rs 46,400 crore and significant additional employment generation over the next eight years.

“The PLI scheme, since it is based on incremental output, is more effective from the Government’s standpoint than some of the other grant based schemes like Mega Food Parks etc. which are more input oriented. It is also targeted towards the larger anchor investors who are capable of mobilising the initial investment for brownfield or greenfield projects by themselves,” Arindam Guha, partner, leader – government & public services, Deloitte India.

It also announced a Rs 14,000-crore package that would incentivise production of active pharmaceutical ingredients (API) and medical devices in the country. As part of the scheme, it announced a Rs 3,420-crore PLI for promoting domestic manufacturing of medical devices.

Apart from pharmaceuticals and medicines, the government also notified a PLI for the electronics and mobile phone sectors in accordance with the National Policy on Electronics.

As part of the scheme, incentives of 4-6 percent will be given to electronics companies that manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors, and nano-electronic components such as microelectromechanical systems, in India.