OBJECTIVES OF THE PRODUCTION LINKED INCENTIVE (PLI) SCHEME

• WTO Compliance: Align with World Trade Organisation obligations.
• Foreign Investment: Attract investments in advanced technology and core sectors.
• Export Boost: Enhance exports and contribute to economic growth.
• Incentives Provided: Concessions on import/export duties, tax rebates, affordable land acquisition, and support for anchor investors.
• Sustainable Development: Encourage investments in labor-intensive sectors for sustainable development.

BENEFITS OF PLI SCHEMES

• Supporting Key Sectors: Target specific industries crucial for economic and technological advancement.
• Export Competitiveness: Promote export-oriented production to increase international competitiveness.
• Innovation and Technology: Drive innovation and efficiency through adoption of advanced technology.
• Industrial Infrastructure: Support development for easier establishment/expansion of manufacturing units.
• Economic Growth: Promote domestic manufacturing, job creation, investment attraction, and export boosting.
• Manufacturing Boost: Provide incentives for incremental sales to promote domestic production.
• Import Reduction: Reduce dependence on imports, enhancing self-reliance.
• Employment Opportunities: Focus on labor-intensive sectors to increase job opportunities.
• Foreign Investment Attraction: Incentivize foreign companies to set up manufacturing units in India.
• Global Supply Chain Integration: Help integrate India into the global supply chain.

CURRENT STATE AND CHALLENGES

• Government Initiation: Initiated 14 PLI schemes with Rs. 1.97 trillion outlay.
• Implementation and Disbursement: Less than 5% of PLI outlay disbursed; some schemes did not take off.
• Competition and Market Dynamics: Risk of price wars or market distortions.
• Strategic Sectors: Focus on electronics, EVs, solar cells/modules, and batteries.
• Execution Issues: Some PLIs (e.g., textiles and steel) failed to start; others made minimal impact.
• Disbursement Shortfall: Only Rs 9,727 crore disbursed until 2023-2024, a mere 4.92% of the total outlay.

RECOMMENDATIONS FOR IMPROVEMENT

• Strategic Focus: Retain and upscale four strategic PLIs:
  • PLI-LSEM (Large Scale Electronics Manufacturing)
  • PLI for batteries
  • PLI-HESM (High Efficiency Solar Modules)
  • PLI-A&AC (Automobiles and Auto Components)
• Consolidate PLIs: Merge three PLIs on pharmaceuticals and medical equipment into one.
• Discontinue Ineffective PLIs: Wind up non-strategic PLIs, including PLI-ITH.
• Professional Execution: Establish a high-powered technology-rich PLI Authority for better planning and execution.