The Production Linked Incentive (PLI) scheme is a strategic initiative introduced by the government in 2020. Its primary goal is to attract investments and promote the manufacturing of goods for both domestic consumption and exports. The scheme provides financial incentives based on incremental sales, which are distributed over a span of five years.
Initially, the PLI scheme encompasses 14 sunrise and strategic sectors. These include:
To fully utilize the allocated funds and stimulate further investments, the government is considering the expansion of the PLI scheme into new areas. Sectors such as toys, footwear, and leather are under review. This expansion aims to encourage manufacturing and drive economic growth in labor-intensive industries.
The government is currently finalizing the details for including toys, footwear, and leather in the PLI scheme. Cabinet notes pertaining to these sectors are in the advanced stages of preparation.
For the proposed expansion, the initial allocation is around ₹3,500 crore for the toy sector, and approximately ₹2,600 crore for both the footwear and leather sectors.
The inclusion of toys, footwear, and leather is driven by their labor-intensive characteristics and ongoing efforts to attract investments. Quality Control Orders (QCOs) have been established to ensure product standards while promoting domestic manufacturing in these sectors.
Some sectors, particularly large-scale electronics, pharmaceuticals, and food processing, have witnessed substantial success under the PLI scheme. However, other sectors, such as high-efficiency solar PV modules, ACC batteries, textile products, and specialty steel, have not performed as well.
The government intends to repurpose savings from sectors that are under-subscribed to support additional areas under the PLI scheme. This may also lead to the restructuring of existing schemes that require adjustments.
In the financial year 2022-23, incentives amounting to approximately ₹2,900 crore were disbursed. This figure is expected to escalate significantly to around ₹13,000 crore in the current fiscal year.
The overarching vision behind the expansion of the PLI scheme is to cultivate a favorable investment climate, enhance manufacturing capabilities, decrease reliance on imports, and promote sustainable economic growth. This expansion also emphasizes the importance of maintaining quality standards within the selected sectors.
Q1. What does the PLI scheme aim to achieve?
Answer: The PLI scheme aims to attract investments, boost manufacturing, and promote exports in critical sectors, thereby stimulating economic growth.
Q2. Why are new sectors being added to the PLI scheme?
Answer: New sectors are being added to fully utilize allocated funds and drive investments in labor-intensive industries like toys, footwear, and leather.
Q3. How are incentives determined under the PLI scheme?
Answer: Incentives are based on incremental sales and are disbursed over a period of five years to encourage sustained growth in manufacturing.
Q4. What is the expected impact of the PLI scheme on employment?
Answer: The PLI scheme is expected to create jobs by promoting manufacturing in labor-intensive sectors, thereby boosting employment opportunities.
Q5. What sectors have performed well under the PLI scheme?
Answer: Sectors like large-scale electronics, pharmaceuticals, and food processing have shown significant success under the PLI scheme, while others have lagged.
Question 1: What is the primary goal of the PLI scheme?
A) To reduce taxes on imports
B) To attract investments in manufacturing
C) To increase tariffs on exports
D) To privatize government enterprises
Correct Answer: B
Question 2: Which of the following sectors is NOT covered under the PLI scheme?
A) Pharmaceuticals
B) Textiles
C) Information Technology
D) Defense Manufacturing
Correct Answer: D
Question 3: How much was allocated for the footwear sector under the PLI scheme expansion?
A) ₹1,500 crore
B) ₹2,600 crore
C) ₹3,000 crore
D) ₹4,000 crore
Correct Answer: B
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