About the scheme

• The Production Linked Incentive (PLI) aims to give companies incentives on incremental sales from products manufactured in domestic units. Apart from inviting foreign companies to set shop in India, the scheme also aims to encourage local companies to set up or expand existing manufacturing units.
• In April last year, the central government had for the first time notified the PLI scheme for mobile phones and allied component manufacturing. 
• As a part of the scheme, companies which set up new mobile and specified equipment manufacturing units or expanded their present units would get incentives of 4 to 6 per cent, after they achieve their investment and production value target for each year. 
• It aimed at making India a hub for manufacturing and exports.
• In November, the government announced expansion of the PLI scheme to include 12 more sectors such as automobile and automobile components, pharmaceutical drugs, textile products, food products, high efficiency solar photo-voltaic modules, white goods such as air conditioners and LED bulbs, and speciality steel products. 

Why is the production linked scheme needed?

• According to experts, the idea of PLI is important as the government cannot continue making investments in these capital intensive sectors as they need longer times to start giving the returns. Instead, what it can do is to invite global companies with adequate capital to set up capacities in India.
• At this point, if the government can focus on labour intensive sectors like textiles, it would be really helpful to boost the economy.

Why in News?

• The Government approved the Production Linked Incentive Scheme for Textiles, with an approved outlay of Rs. 10683 crore over a five year period.

Reference:

1. https://pib.gov.in/PressReleasePage.aspx?PRID=1785855