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. 
• 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.
• 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.

Why in News?

• The Union Cabinet has approved Production Linked Incentive Scheme Tranche-2 on ‘National programme on High-Efficiency Solar PV Modules’ for achieving manufacturing capacity of Giga Watt scale in High-Efficiency Solar PV Modules.
• The national programme on High-Efficiency Solar PV Modules aims to build an ecosystem for manufacturing high-efficiency solar PV modules in India reducing import dependence in the area of Renewable Energy. It will strengthen the Atmanirbhar Bharat initiative and generate employment.

Reference:

1. https://newsonair.gov.in/News?title=Cabinet-approves-production-linked-incentive-scheme-on-National-programme-on-High-Efficiency-Solar-PV-Modules&id=448084