Production-linked incentive scheme for 10 sectors | The story so far

In order to reduce India's dependence on China, the government in March had announced a scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units.

November 18, 2020 / 08:20 AM IST
Representative image

Representative image

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 batteries, textile, food products, solar modules, white goods, and specialty steel.

In order to reduce India's dependence on China, the government in March had announced a scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units.

The sectors which could avail the benefit initially were mobile and allied equipment as well as pharmaceutical ingredients and medical device manufacturing. As these sectors are labour-intensive, it is expected to cater to the growing employment demands of the country.

In October, the Ministry of Electronics and Information Technology (MeitY) approved 16 eligible applicants under the PLI scheme. The PLI for large scale electronics manufacturing extends an incentive of 4 percent to 6 percent on incremental sales of goods manufactured in India to eligible companies, for a period of five years subsequent to the base year (FY2019-20).

Union Minister for Electronics and IT, and Communications Ravi Shankar Prasad had said that the PLI scheme has been a huge success in terms of the applications received from global as well as domestic mobile phone manufacturing companies and electronic components manufacturers.

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The international mobile phone manufacturing companies that have been approved under the mobile phone (invoice value Rs 15,000 and above) segment are Samsung, Foxconn Hon Hai, Rising Star, Wistron and Pegatron.

Out of these, three companies namely Foxconn Hon Hai, Wistron and Pegatron are contract manufacturers for Apple iPhones. Apple and Samsung together account for nearly 60 percent of the global sales revenue of mobile phones. This scheme is expected to increase their manufacturing base manifold in the country.

Under the mobile phone (domestic companies) segment, Indian companies including Lava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Optiemus Electronics are approved by MeitY.

These companies are expected to expand their manufacturing operations in a significant manner and grow into national champion companies in mobile phone production.

For the Department of Pharmaceuticals' (DoP) schemes for promoting domestic manufacturing of drugs, active pharmaceutical ingredients (APIs) and medical devices, as many as 130 pharma companies are learnt to have submitted expressions of interest to the government.

The scheme, launched in July, aims to push domestic manufacturing of API and reduce dependence on imports. This was expected to provide Rs 6,940-crore production linked incentives to domestic drug manufacturers.

“These incentives will provide a boost to R&D in newer areas and help attract investment in cutting edge technology and create a viable ecosystem for India to become a global player,” said Charu Sehgal, partner and life sciences and healthcare industry leader, Deloitte India.
Kamalika Ghosh
first published: Nov 17, 2020 05:38 pm

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