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.
• The central government had for the first time notified the PLI scheme for mobile phones and allied component manufacturing in 2020. 
• Later, the government announced expansion of the PLI scheme to include more than 10 sectors including 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, speciality steel products, drones and drone components, etc.

Why is the production linked scheme needed?

• The PLI schemes have been introduced as a key element of the Atma Nirbhar Bharat package to transform the manufacturing landscape of the Indian economy and integrate it into the global supply chains. 
• The strategy behind these schemes is to offer companies incentives on incremental sales from products manufactured in India, over the base year. 
• They have been specifically designed to boost domestic manufacturing in sunrise and strategic sectors, curb cheaper imports and reduce import bills, improve cost competitiveness of domestically manufactured goods, and enhance domestic capacity and exports.
• PLI Scheme is designed to create a complete component ecosystem in India and make India an integral part of the global supply chains. 
• The PLI scheme is expected to boost production worth an estimated $500 billion in five years since its introduction.

Why in News?

• The Production Linked Incentive (PLI) Schemes have led to a significant increase in production, employment generation, economic  growth and exports in the country. 
• Due to PLI Schemes, there was a significant increase of 76% in FDI in the Manufacturing sector in FY 2021-22 (USD 21.34 billion) compared to previous FY 2020-21 (USD 12.09 billion).
• The PLI schemes with the objective of making India ‘AatmaNirbhar’ is built on the foundation of 14 sectors with an incentive outlay of Rs. 1.97 lakh crore (about US$ 26 billion) to strengthen their production capabilities and help create global champions.
• PLI Schemes have transformed India’s exports basket from traditional commodities to high value- added products such as electronics & telecommunication goods, processed food products etc.

Reference:

https://pib.gov.in/PressReleasePage.aspx?PRID=1932051