Production Linked Incentives Policy – Success and Outcomes

Production Linked Incentive Policy is important as the government of India started it to motivate foreign countries to search for work in the country and produce employment. Also, it supports domestic and local production to generate small jobs.

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Production Linked Incentives Policy – Success and Outcomes.

The government of India established Production Linked Incentive schemes in November 2020. In the Union Budget 2020, the finance minister has announced PLI schemes of Rs. 1.98 Lakh Crores across 13 key sectors.

Production Linked Incentive Policy is important as the government of India started it to motivate foreign countries to search for work in the country and produce employment. Also, it supports domestic and local production to generate small jobs.

Also Read: Budget 2022: Areas that need focus to achieve India’s 5 trillion economies by 2025

According to the report of June 2022, the total production of the PLI scheme was more than INR. 1,67,770 crores, including exports of INR. 65,240 crore.

Today PLI can add a nearby 4% of GDP per annum if the incremental revenue is realized. The government has found this policy to decrease India’s dependency on other foreign countries.

PLI policy supports labour incentive sectors and targets growth of the employment ratio more in India. Moreover, it helps to decrease import bills and elevate domestic production. Further, PLI scheme targets local industry development, which can motivate local manufacturing units. Also, this scheme clears the way for research and innovation. We can say that these local manufacturing units can be competitive long-term.

Extension of PLI schemes to other sectors

The government introduced the PLI scheme for the other ten key sectors in 2020. The apprised PLI schemes are electronic products, food items, telecom & networking products, white goods (LED & ACs), solar PV modules of high efficiency and pharmaceutical drugs. The scheme was expected to increase manufacturing, generate employment, increase exports & cut imports with an outlay of Rs 3 trillion.

Also, the government is following the concerned Department of PLI Schemes in sectors such as steel specialty, automobiles& components, textile products and advance chemistry cell battery. However, there are a few challenges faced;

  • Under the PLI scheme there were no common set of parameters to understand the companies that have received or going to receive incentives.
  • Also we can’t compare two different schemes, as at present various ministers observe value addition of their PLI schemes.
  • Only 2 to 4 companies manage to achieve their incremental sales, from the 14 companies which have been approved for the PLI scheme.
  • Mostly domestic companies relay on one or two supply chains that have been neglected and these companies would not be qualified for the incentive.

PLI Scheme is not becoming successful

The failure of the PLI scheme can be attributed IT Hardware manufacturers as they have given a low incentive structure. PLI scheme for IT Hardware 2.0, is now ready to be circulated among stakeholders. It is recommended to increase this incentive if India wants to become manufacturing hub. It will also help to sustain the IT growth in the nation.

The average incentive given to candidates under electronic hardware was very low for PLI. Also government need to give more incentive to IT Hardware makers to move the production capacity from China to India.

If government pays proper attention to this sector chances to be successful increases as we can generate more employment from IT Hardware.

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Production Linked Incentives Policy – Success and Outcomes.
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Production Linked Incentive Policy is important as the government of India started it to motivate foreign countries to search for work in the country and produce employment. Also, it supports domestic and local production to generate small jobs.
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THE POLICY TIMES
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