What’s in the news?
- Recently, the Union Cabinet approved a Production-Linked Incentive (PLI) scheme for the textiles sector worth Rs 10,683 crore.
- The scheme aims to attract fresh investment of Rs 19,000 crore in the sector for production of in-demand textiles, and additional turnover of Rs 3 lakh crore over five years. This is part of a larger PLI scheme for 13 sectors, with a total budgetary outlay of 1.97 lakh crore.
What is the production linked incentive scheme?
- In order to boost domestic manufacturing and cut down on import bills, the central government in March 2021 introduced a scheme that 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.
- So far, the scheme has been rolled out for mobile and allied equipment as well as pharmaceutical ingredients and medical devices manufacturing. These sectors are labour intensive and are likely, and the hope is that they would create new jobs for the ballooning employable workforce of India.
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 garments and leather, it would be really helpful to boost the economy.
Which sectors currently have the PLI scheme?
- As a part of the PLI scheme for mobile and electronic equipment manufacturing, an incentive of 4-6 per cent is planned for electronics companies which manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electromechanical systems.
- Similarly, the PLI scheme for pharmaceutical ingredients and medical devices seeks that applicants will commit a certain amount prescribed by the government as investment to build capacities in these areas.
- The government announced a mega PLI scheme for 10 sectors, including advanced chemistry cell battery, electronic products, automobiles and auto components, pharma, telecom and networking products, textile, food products, white goods and speciality steel.