June 12, 2021
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What is Production Linked Incentive(PIL) Scheme and its aims?

As a part of the National Policy on Electronics, the IT ministry on April 1 2020 notified a scheme, Production Linked Incentive(PIL) Scheme which would give incentives of 4-6 per cent to electronics companies which manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electromechanical systems.

The PLI scheme will be active for five years with financial year (FY) 2019-20 considered as the base year for calculation of incentives.

Aims

1) Target specific product areas

2) Introduce non-tariff measures in order to compete more effectively with cheap imports

3) Blend domestic and export sales to make manufacturing competitive and sustainable

4) Promote manufacturing at home while encouraging investment from within and outside India.

Expectations

The government expects that this scheme will result in an incremental production of Rs 2 lakh crore over the next five years and give India a sizeable foothold in the Rs 100 billion telecom and networking products exports market.

Conclusion

It offers a simple and direct incentive based on incremental sales, designed to boost domestic manufacturing and attract large investments in mobile phone and specified electronic component manufacturing units. In November 2020, the PLI scheme was extended to ten more sectors, including food processing, battery storage, automobile components and specialty steel.

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