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Production Linked Incentive Scheme


The Prime Minister's clarion call for a 'AatmaNirbhar Bharat' envisions policies to promote the country's manufacturing sector as efficient, equitable, and resilient. Growth in industrial goods production and exports will expose the Indian industry to more foreign competition and ideas, which will aid in improving its ability to innovate further. The promotion of the manufacturing sector and the establishment of a conducive manufacturing ecosystem will not only enable integration with global supply chains, but will also establish backward links with the country's MSME sector. It will lead to overall economic growth and create a large number of job opportunities.

Self-sufficiency does not seek to be an impenetrable barrier between India and the rest of the world. It is intended to broaden the export basket, which has previously faced stiff competition, and reduce trade imbalances, improve quality, and encourage rather than coerce consumption of indigenous products.

Unlike Nehru's industry policy, Aatma Nirbhar Bharat, 2020 have opened the door to private investment, research, innovation and job creation.

“Forces of protectionism are raising their head against globalisation. Their intention is not only to avoid globalisation themselves but also to reverse its natural flow. The result of all this is that we get to witness new types of tariff and non-tariff barriers...Many countries are becoming inward-focused and globalisation is shrinking and such tendencies can't be considered lesser risk than terrorism or climate change” Narendra Modi

What is PLI (Production Linked Incentive ) Scheme?

The central government introduced a scheme to give companies incentives on incremental sales from products manufactured in domestic units in order to boost domestic manufacturing and reduce import bills. Apart from inviting foreign firms to establish a presence in India, the scheme also seeks to encourage domestic firms to establish or expand existing manufacturing units.

The PLI scheme will be implemented by the pertinent ministries/departments while operating within the overall financial limits set. The final PLI proposals for individual sectors will be reviewed by the Expenditure Finance Committee (EFC) before being approved by the Cabinet. The Empowered Group of Secretaries can use any savings from one approved sector's PLI scheme to fund another approved sector. Any addition will need to be approved by the Cabinet again.

The PLI scheme in fourteen key specific sectors will make Indian manufacturers globally competitive, attract investment in core competency and cutting-edge technology, ensure efficiencies, create economies of scale, boost exports, and integrate India into the global supply chain.

So far, the government has announced PLI schemes for 14 sectorsincluding automobile and auto components, electronics and IT hardware, telecom, pharmaceuticals, solar modules, metals and mining, textiles and apparel, white goods, drones, and advanced chemistry cell batteries.

The kind of manufacturing ramp-up that we need necessitates cross-cutting initiatives. The concept of PLI is important because the government cannot continue to invest in these capital-intensive sectors

(Electronics and pharmaceuticals are large sectors) because they take longer to yield returns. Instead, it can invite global companies with sufficient capital and expertise to set up operations in India.

The PLI Schemes are expected to enable the establishment of a broad supplier base for the scheme's global champions. It will aid in bringing scale and size to key sectors, as well as creating and nurturing global champions. All of the units combined would assist India in creating a large number of primary and secondary job opportunities.

Way Forward

E-commerce has the potential to be a driver of overall economic growth over the next decade through its impact on demand generation, manufacturing expansion, job creation, and increased transparency. A Committee chaired by the CEO of NITI Aayog conducted an examination of issues relating to the e-commerce industry. It made recommendations for the sector's growth, including expanding internet access, digitising payments, and enhancing transportation infrastructure, logistics, and support for distributed warehousing. These may be considered for implementation as soon as possible.

Harmonize Indian quality standards with international standards in a variety of industries. Inadequate harmonisation has harmed Indian exports and precluded India from fully leveraging trade agreements. For example, the medical device industry would greatly benefit from compliance with standards that are necessary for new products to be accepted by doctors and patients abroad.

Consider the following issues in relation to MSMEs:

  • Establishment of megaparks and manufacturing clusters in labor-intensive sectors to reduce costs and improve quality. Additionally, state governments should establish plug and play parks (flattened factories) to ensure compliance with international productivity standards.

  • Industrial unit workers in new mega parks should have decent housing within a reasonable distance of their place of employment.

  • An expert committee should examine and make recommendations on sector-specific pain points.

Launch a significant initiative to compel industry to embrace Industry 4.0. It is defined by an increase in the digitization and connectivity of products, value chains, and business models. It will have a sizable impact on industries such as automotive, pharmaceuticals, chemicals, and financial services, resulting in operational efficiencies, cost containment, and revenue growth. According to experts, emerging markets such as India could significantly benefit from the adoption of Industry 4.0 practises.


The Government of India is making continuous efforts under Investment Facilitation to identify potential investors for the implementation of Make in India action plans. Under the Make in India banner, support is being provided to Indian Missions abroad and State Governments for the organisation of events, summits, road shows, and other promotional activities to attract investment in the country. Investment outreach activities are being carried out in order to improve international cooperation in order to promote FDI and ease of doing business in the country.


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