The Production Linked Incentive (PLI) scheme, aimed to boost domestic manufacturing under the government’s Atmanirbhar Bharat initiative, was introduced in March 2020. In Budget 2021-22, 13 sectors were identified for an outlay of INR 1.97 lakh crore. So far, the scheme has been approved for nine sectors: automobiles and auto components, advance chemistry cell (ACC) battery, textile, speciality steel, white goods, electronic or technology products, pharmaceuticals drugs, telecom and networking, food processing and high-efficiency solar PV modules. The scheme is aimed at:

  • Offering incentives
    Offering incentives to promote manufacturing at home
  • Encouraging investments
    Encouraging investments both from within and outside India
  • Substituting imports
    Substituting imports of specified products
  • non-tariff measures
    Introducing non-tariff measures to make imports difficult

Sectors in focus

Food processing

Aimed to cover maximum players in the industry, a total incentive of INR 10,900 crore has been planned for the sector. The scheme will be implemented over a six-year period, starting 2021-22, and is applicable only for products manufactured in India.

Objectives

  • Fiscal incentive to large manufacturers based on eligibility criteria
  • Support to small and medium-sized enterprises (SMEs)
  • Support for branding and marketing abroad

Focus areas

  • Creation of global food manufacturing champion
  • Strengthen Indian brands of food products for global visibility and wider acceptance in the international markets
  • Employment opportunities for off-farm jobs

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Pharmaceutical

With a total planned incentive of INR 15,000 crore, the scheme is aimed at creating champions to penetrate global value chains. It will be implemented over a nine-year period, starting 2020-21 and is only for applicants registered in India.

Objectives

  • Enhance India’s manufacturing capabilities by increasing investment
  • Contribute to product diversification

Focus areas

  • Development of complex and high-tech products
  • Production of high value products in the country and increase the value addition in exports
  • Employment for both skilled and unskilled personnel

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ACC battery storage

Applicable for manufacturing in India, the sector has received a total incentive of INR 18,100 crore. Under the scheme, a manufacturing facility will be commissioned within two years and incentives will be disbursed over a five-year period.

Objectives

  • Setup cumulative 50 GWh of ACC manufacturing facilities
  • Import substitution of around INR 20,000 crore every year
  • Facilitate demand for electric vehicles and battery consuming sectors

Focus areas

  • Create demand for battery storage in India
  • Develop newer and niche cell technologies
  • Research and development to achieve higher specific energy density and cycles

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White goods

With a stringent rule to cover maximum players of the industry, the sector has bagged incentives worth INR 6,238 crore over FY 2022-29. To begin with, application under scheme will be opened for six months, which may be extended further.

Segments notified

  • Components for air conditioners
  • Components for LED lightings

Focus areas

  • Indigenous manufacturing of core components
  • Attract large investment in white goods value chain
  • Create a robust component ecosystem and boost employment generation

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Automotive

Automotive

Eligible for any auto company with a turnover of INR 1,000 crore, the scheme is aimed at covering maximum industry players. The sector has, by far, received the highest outlay of INR 57,042 crore, of which INR 18,100 crore is for original equipment manufacturer (OEMs) in electric vehicle (EV) space for advanced chemistry cell batteries.

Objectives

  • Large manufacturing capacities at par with global standards
  • Local manufacturing and exports
  • Additional investment and employment generation for the next five years

Proposed plans

  • Sourcing incentive scheme
  • Champion OEM incentive
  • Logistic cost-linked incentive
  • Component champion incentive scheme

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Unlocking pharmaceutical sector’s growth potential

Understanding the Production Linked Incentive (PLI) scheme for the pharmaceutical sector

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