Production Linked Incentive scheme
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?
- Representatives of the toy industry in India urged the government to bring the sector under the Production Linked Incentive Scheme to make it competitive and get it on a fast-growth mode.
- They said that the toy sector can be a force multiplier for the socio-economic development of tier-II and tier-III cities in the country given its potential to generate jobs at scale.
- For every $10 million generated in revenue, the toy industry has the potential to create 1,000 direct and several thousand downstream jobs in the country.
- In addition to the skilled labour and technological expertise, India also has a cost advantage over global toy makers, including China, Vietnam and Thailand. For instance, the current cost of labour in India is one-third that of China.
- The country has over 4,000 toy makers under diverse categories and only 10% of them are now in the organised sector.
- The global toy market is currently estimated to be about $80-100 billion while India accounts for a minuscule share of this in the region of $1.5 billion. However, the country’s toy sector is projected to grow at a CAGR of 15% between 2021 and 2026, according to industry estimates.
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