Page 27 - Banking Finance June 2023

ARTICLE

PRODUCTION

LINKED

INCENTIVE (PLI)

SCHEME 2.0

provides incentives to domestic industries to boost local
Introduction
production. When that happens, specifically tailored
PLI Scheme, as the Production Linked Incentive Scheme is
products emerge that satisfy a selected niche of target
commonly abbreviated as, is an initiative started by the
audience. Domestic businesses also help in cutting down
Government of India to not only encourage foreign
import bills. As per the PLI scheme, the government
companies to find workforce in the country and thereby
encourages domestic companies and establishments to set
generate employment, but also encourage domestic and
up or expand on manufacturing units to increase production,
local production to create micro jobs. This scheme is a
to which the government provides incentives on incremental
flagship programme of the Government of India launched
sales. Under the PLI Scheme, eligible companies will receive
in March 2020. The scheme aims to encourage domestic
financial incentives based on their incremental sales or
manufacturing and reduce India's dependence on imports,
exports over a period of five years.
particularly from China. The scheme provides financial
incentives to eligible companies for increasing their
production in identified sectors. Context
1. Over the past 8 years, the electronics manufacturing
As clear by the name, PLI scheme is an initiative that industry in India has experienced consistent growth,
achieving a commendable Compound Annual Growth
Rate (CAGR) of 17%. This year, it has surpassed a
significant production milestone, reaching 105 billion
USD (equivalent to about Rs 9 lakh crore).

2. India has successfully emerged as the world's second-
largest manufacturer of mobile phones, highlighting its
prowess in the electronics manufacturing sector.

24 | 2023 | JUNE | BANKING FINANCE