What is PLI Scheme | PLI Scheme Full Form | Who is eligible for PLI scheme | List of Sectors Under PLI Scheme | PLI Scheme Benefits
The Production-Linked Incentive or PLI Scheme aims to provide companies with incentives based on incremental sales from products created in domestic units over the fiscal year 2019-20. The initiative encourages international companies to establish units in India, but it also attempts to encourage Indian companies to establish or expand existing manufacturing facilities, so creating more jobs and reducing the country’s dependency on imports from other nations.
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What is PLI Scheme?
In her 2021-22 budget speech, Finance Minister Nirmala Sitharaman announced Rs 1.97 lakh crore allocation for the Production-Linked Incentive PLI Scheme for 13 specified sectors. The Cabinet had sanctioned the PLI Plan for nine industries. The approval has been made till early April. The initiative, which was introduced in March last year as part of the government’s Atmanirbhar Bharat campaign to boost domestic manufacturing, is expected to produce a minimum of $500 billion in five years, according to the Commerce Ministry.
Apart from focusing on reducing import expenses and boosting the cost competitiveness of local goods, the scheme provides incentives to enterprises for strengthening their domestic manufacturing. PLI is a scheme that rewards incremental sales of products made in India. The first three PLI projects were approved in March of last year, and ten more were notified in November, with six of them being approved subsequently. The competent ministries and departments need to implement the strategy for their respective sectors. Any savings from one approved sector’s PLI program can be used to fund another approved sector’s PLI plan, according to a Cabinet declaration from November last year.
Sectors Currently Supported Under PLI Scheme
Electronic or technology products (Rs 5,000 crore outlay for 5 years), food products (Rs 10,900 crore), pharmaceuticals drugs (Rs 15,000 crore), telecom & networking products (Rs 12,195 crore), high-efficiency solar PV modules (Rs 4,500 crore) are among the nine sectors for which the scheme has already been approved. Advance chemistry cell (ACC) battery, Automobiles and auto components, textiles, and specialty steel were the remaining four PLI sectors awaiting Cabinet clearance. Electronics and technology product firms submitted 16 applications worth Rs 35,541 crore to the plan, while medical device producers submitted 14 applications worth Rs 873.93 crore.
Applications must be submitted online to the proper ministry or department, and then the disbursement process, which includes claim verification, approval, and distribution, must be completed.
“The PLI plan is a perfect illustration of how a laggard sector can be successfully enabled by the government. PLI 1 was created for the purpose of assembling mobile phones. In 2014, India produced 50 million cellphones, accounting for 19% of the country’s total demand. India produced 260 million handsets in 2020, accounting for 96% of national demand. Not only has the PLI plan aided the industry’s spectacular growth, but it has almost stopped the import of mobile handsets,” said Omer Basith, co-founder and CEO of Virtual Forest. Virtual Forest uses machine technologies to assist minimize carbon emissions from household appliances.
Objective of the PLI Scheme
The goal of expanding the PLI Scheme to include more products was to:
- To safeguard specific product areas
- Impose non-tariff measures that raise the cost of imports.
- Recognize the importance of exports in the overall growth strategy, but place a greater emphasis on the domestic market.
- To boost domestic manufacturing by providing production incentives and encouraging both internal and external investment.
Eligibility for PLI Scheme
The PLI Scheme is open to companies that are registered in India and are engaged in the manufacturing of goods that fall within the scheme’s target segments. The Scheme’s eligibility will be determined by incremental investment thresholds (covered under Target Segments) over the base year.
To be eligible for distribution of incentive for the year under consideration, an applicant must achieve threshold conditions (i.e. incremental investment) of a minimum of INR 10 crore (MSME) or INR 100 crore (Others) and a maximum of INR 1000 crore.
The cumulative value of investment made until such year (including the year under consideration) beyond the Base Year (2019-20) shall be deemed to meet the threshold criterion of Incremental Investment for any year. There are other threshold criteria for incremental sales in several industries.
At one or more locations across the country, the applicant can operate an existing or new manufacturing plant. Companies will be eligible for the incentive scheme if they spend more money on plant, machinery, equipment, research and development, and knowledge transfer for manufacturing in the target categories.
Incentive under PLI Scheme
Last year, a 4-6 percent incentive was granted on the manufacture of mobile and electronic components such as resistors, transistors, and diodes. Likewise, the scheme provided 10% incentives for the food processing industry for six years (FY22-27). According to the ministry, SMEs in four categories will be assisted to manufacture innovative and organic products, including ready-to-cook or ready-to-eat, marine products, processed fruits and vegetables, and mozzarella cheese.
Companies engaged in the manufacturing of air conditioners and LED lights were also awarded a 4-6 percent incentive on incremental sales of items manufactured in India for a period of five years.
Companies during the first five months of the scheme in the electronics manufacturing industry that applied for the scheme produced goods worth around Rs 35,000 crore and invested around Rs 1,300 crore. This report is as per the Commerce Ministry’s Quarterly Review Reports for the quarter ending December 2020.
The PLI Scheme over the next five years is likely to result in
- An incremental investment of Rs 7,920 crore in white goods companies as well as
- Increased output of Rs 1.68 lakh crore,
- Exports of Rs 64,400 crore, and
- Direct and indirect revenues of Rs 49,300 crore.
“Now is the time for us to look about ease of doing business 2.0 and bring it to places where the PLI plan is being implemented, not just in larger cities,” Tripathi
Implementation of (PLI) Scheme for Telecom Sector
The Project Management Agency (PMA) will serve as the Nodal Agency for the PLI Scheme’s implementation. This project, worth Rs. 40,995 crores, aims to increase the country’s manufacturing capability. Support under the PLI Scheme will be provided for a period of five years after the base year, with incentives beginning on August 1, 2020.
Application for PLI Scheme
- Any company registered in India is eligible to apply.
- A maximum of one application for financial assistance under the Scheme will be allowed per applicant.
- PMA(Project Management Agency) / MeitY will receive the application (through an online portal) for prima facie examination. It will also issue an acknowledgement within 15 days of the examination’s completion.
- Upon receipt of an application, the PMA will examine and enter the pertinent information into the thorough checklist.
- As a result, the PMA will make appropriate recommendations to the Technical Committee (TC) for Scheme approvals.
- The PMA and Technical Committee’s final recommendations will be presented to the Empowered Committee (EC) for approval.
PLI Scheme Background
On April 1, 2020, the IT Ministry announced a scheme that would provide 4-6 percent incentives to electronics companies that manufacture mobile phones and other electronic components such as transistors, capacitors, thyristors, diodes, resistors, and nano-electronic components such as microelectromechanical systems as part of the National Policy on Electronics. Companies that create mobile phones that sell for INR 15,000 or more will receive a 6% incentive on additional sales of all such mobile phones made in India, according to the scheme.
All applications must be completed within 60 days after the date on which the acknowledgment of receipt of the application was sent. After getting approval from the Competent Authority, an approval letter will be given to the applicant within 5 working days.
Scheme Benefits
Some of the benefits of the PLI Scheme are as follows:
- By 2025, India is predicted to create a digital economy of $1 trillion. Furthermore, the government’s push for data localization, the Indian Internet of Things industry, and programs like Smart City and Digital India are likely to boost demand for electronic items. The PLI plan will improve India’s electronic product production.
- The PLI scheme will make Indian firms globally competitive, assure efficiency, attract investment in core competency and cutting-edge technology, boost exports, create economies of scale, and make India an integral component of the global supply chain in these ten key particular sectors.
- India intends to become a significant original equipment manufacturer of telecom and networking goods, as telecom equipment is a crucial and strategic component of developing a secure telecom infrastructure. The PLI plan is projected to draw huge investments from international firms while also assisting domestic enterprises in seizing emerging possibilities and becoming major export players.
- For various global growth industries, like as consumer electronics, electric cars, and renewable energy, ACC battery production represents one of the largest economic opportunities of the twenty-first century. The ACC battery PLI plan will encourage significant domestic and foreign players to build a competitive ACC battery infrastructure in the country.
- The Indian pharmaceutical industry is the world’s third-largest by volume and the 14th largest by value. It accounts for 3.5 percent of all medications and medicines exported worldwide. The PLI scheme will encourage global and domestic players to produce high-value goods.
- Due to the electronic (hackable) structure of the value chain, large imports of solar PV panels pose hazards to supply-chain resilience and pose strategic security problems. A targeted PLI scheme for solar PV modules will encourage domestic and international businesses to invest in large-scale solar PV capacity in India, allowing India to leapfrog the global value chains for solar PV manufacturing.
- The Indian textile sector is one of the largest in the world, accounting for 5% of worldwide textile and garment exports. However, India’s proportion in the manmade fiber (MMF) segment is modest, compared to worldwide consumption patterns, which are dominated by this segment. The PLI plan is expected to attract significant investment in the sector, which will help to expand domestic production, particularly in the MMF area.
- Farmers benefit from the rise of the processed food business since it raises their prices and eliminates waste. Specific product lines with strong growth potential and the potential to produce medium- to large-scale employment have been identified for PLI support.
- Due to the electronic (hackable) structure of the value chain, large imports of solar PV panels pose hazards to supply-chain resilience and pose strategic security problems. A targeted PLI scheme for solar PV modules will encourage domestic and international businesses to invest in large-scale solar PV capacity in India, allowing India to leapfrog the global value chains for solar PV manufacturing.
- White goods (air conditioners and LEDs) have a great deal of potential for domestic value addition and global competitiveness. A PLI program for the sector would result in greater local manufacturing, job creation, and exports.
- Steel is an important strategic industry, and India is the world’s second-largest steel manufacturer. It is a net exporter of finished steel and has the potential to dominate certain steel grades. A PLI program for Specialty Steel will aid in the development of production capacities for value-added steel, resulting in increased total exports.
Apply for PLI Scheme
The Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing is accepting applications for a four-month period (through July 31, 2020), with the possibility of an extension. Telecom Manufacturing Companies in India can apply by completing the India PLI Scheme Online Registration / Application Form and submitting it through the new PLI site, which can be accessed using the mentioned below. To apply for the PLI Scheme in India online follow the below instructions:
- First of all go to the official website https://pli.ifciltd.com/
- On the homepage click on the “Register” button.
- The online registration form for the Production Linked Incentive PLI Scheme for large-scale electronics manufacturing will display as follows:
- Applicants can finish the online application procedure by entering organization details (Name of organization, CIN,PAN, GSTIN, address), authorized person details, and then click on the “Register” button.
- Go to https://meity.gov.in/esdm/pli-scheme/ for PLI Scheme guidelines, notifications, presentations, and other information.
FAQ’s
A company registered in India that proposes to produce items covered by Target Segments in India and submits an application for approval under the Scheme is an applicant for the Scheme. The applicant can run a new or existing manufacturing plant to produce commodities that fall within the Target Segments (i.e. mobile phones and specified electronic components).
The Application Window will be 4 months from the date of the Scheme’s notification, according to Paragraph 6.1 of the Scheme. Since the notification was issued on April 1, 2020, applications for the Scheme will be accepted until July 31, 2020.
If an entity’s (group company) manufacturing revenue in the target segment is claimed and considered by two or more applicant firms, the manufacturing revenue of that entity in the target segment will be evenly distributed among the applicants claiming revenue from that entity.