Impact of Production Linked Incentive Scheme on the manufacturing sector "PLI will encourage global leaders to create capacities in India, boosting FDI and creating jobs for the youth"
By Rajat Shah , IIFT Under its Atma Nirbhar Bharat resolution, the Union Cabinet approved a productionlinked incentive scheme for "ten primary sectors" to improve India's manufacturing capabilities and exports in April 2020. This scheme has been allocated Rs 1.45 lakh crore, with cars and auto parts receiving the largest share, followed by advanced chemistry cell batteries, pharmaceuticals, and medicines. Then there are telecom and networking goods, textiles, and food. The list is completed by white goods, specialty steel, and high-efficiency solar PV modules. The salient elements of the direction seem to include the following: Protect identified product areas through higher tariffs Assiduously work towards introducing non-tariff measures to make imports difficult Acknowledge the relevance of exports in the overall growth strategy but focus more on the domestic market Promote manufacturing at home by offering production incentives and encourage investment The scheme aims to render Indian manufacturers ‘globally competitive, attract investment in core competencies and cutting-edge technology, ensure efficiencies, build economies of scale, boost exports, and make India an integral part of the global supply chain.'
Infineeti
When taken together, this resolution, along with the three production-linked incentive schemes announced earlier for mobile handsets, active pharmaceutical ingredients, and main starting materials, and medical devices demonstrate the government's desire to promote manufacturing in the country following the failure of the "Make in India" initiative. The sectors for PLI have been shortlisted based on their potential for economic growth, revenue, and employment generation. The extent of benefit to the rural economy and its criticality in the next few decades has also been considered while finalizing the sectors. Extremely strong manufacturing skills are also needed to compete with Asian competitors who have made staggering progress in one or more of these areas. It will also help India's rural development by ensuring constant electricity and digital connectivity. Import substitution, export promotion, costcompetitive
and
productive
production,
economies of scale, increased contribution to global value chains, and increased market share are all goals of the PLI scheme. Furthermore, it will encourage global leaders to create capacities in India, boosting FDI and creating jobs for the youth.
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