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The union cabinet has announced a Rs 76,000-crore Performance Linked Incentive (PLI) scheme to boost the production of semiconductors in the country with the ambitious dream of 'Atmanirbhar Bharat' and creating jobs. Wanna know more about it? Don’t worry we got you covered.

Production linked Incentive Scheme was introduced in India in March 2020, promoting the economic vision of ‘Atmanirbhar Bharat’. Subsequently, the Government of India has expanded this scheme to multiple sectors of the Indian economy.

Let's understand what the Production Linked Incentive Scheme is and how can the Indian economy derive benefits from it?

In March 2020, The Ministry of Electronics and Information technology announced an investment of INR 40,000 crore in the electronics sector to offer incentives to companies on incremental production in domestic manufacturing units.

This Scheme mainly aims to invite foreign companies to set up manufacturing units in India and encourages domestic companies to expand their production. PLI scheme will boost domestic manufacturing which will be extremely beneficial for the economy as it will generate employment and also reduce India’s dependence on imports. The Companies enrolled in this scheme will also gain significantly as they can avail huge incentives from the government. This will lead to a win-win scenario for everybody.

The Scheme lays down clear guidelines regarding the type of investments which will be considered for incentives. Investment in plant, machinery, equipment, research, and development will be considered while calculating the number of incentives while investment on land and building are excluded from the scheme.

Ministry of Electronics and Information technology appointed a nodal agency as a project management agency(PMA) which will manage the implementation. Samsung, Pegatron, and Flex were amongst the first companies to avail these benefits. The Ministry extended an incentive of 4-6% on incremental production of electronic goods manufactured in India to the eligible companies.

Economists have predicted that if this scheme is implemented appropriately, it will help shift the electronics production market from China to India.

In November 2020, the government expanded this scheme into 10 more sectors with an additional investment of INR 1.46 lakh crores for a 5 year period. This included some of the key sectors of the Indian economy like automobiles, pharmaceuticals, textiles, telecom, and networking. The final proposed financial limits for individual sectors were appraised by the Expenditure Finance Committee(EFC) and after the approval of the cabinet, the PLI schemes were introduced by the concerned ministries. As of 2022, there is a total investment outlay of INR 1.97 lakh crores spread across 13 sectors of the economy.


Sarabdeep, Bhargab


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