Production Linked Incentives in Key Sectors – Part 2

  • IASbaba
  • September 20, 2021
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Spotlight Sep 16: Production Linked Incentives in Key Sectors: A Boost To Make In India – https://youtu.be/NzQ2DH_6vEU 


  • GS-3: Indian Economy

Production Linked Incentives in Key Sectors – Part 2

Context: Production linked incentive (PLI) scheme aims at boosting domestic manufacturing and exports, is expected to –

  • Increase the country’s production by USD 520 billion in the next five years
  • Make India self-reliant in manufacturing goods for local and export markets, positioning it as a global manufacturing hub
  • Make domestic manufacturing competitive and efficient, build capacity, and benefit from economies of scale, enhance exports, attract investment and create jobs. 

Click here for Part-1

F. For Specialty Steel: With a budgetary outlay of Rs 6,322 crore over a period of five years from 2023-24.

  • It is value-added steel, which is made by processing normal finished steel.
  • It is done by converting normal finished steel into high value-added steel by way of coating, plating and heat treatment.
  • Apart from the automobile sector and specialised capital goods, they can be used in various strategic applications such as defence, space, power etc.
  • SS are categorized in various types such as, coated/plated steel products, high strength/wear resistant steel, speciality rails, alloy steel products and steel wires, electrical steel etc.

G. For India’s textile sector: To help India regain its historical dominant status in global textiles trade.

  • The incentives shall encourage investment in new capacities in man-made fibre (MMF) apparel, MMF fabrics, and 10 segments or products of technical textiles. 
  • The scheme shall help attract investment of more than Rs. 19,000 crore, creating an additional 7.5 lakh direct jobs.
  • There will be two levels of investment with different sets of incentives. 
    • In the first category, any person or firm can invest a minimum Rs. 300 crore in plant, machinery, and civil works to produce the identified products to ensure eligibility for the PLI.
    • In the second category a minimum investment of Rs. 100 crore would make an individual or firm eligible to apply for the incentives.
  • Priority would be given for investment in aspirational districts, tier-three, tier-four towns and rural areas. 
  • The scheme is expected to benefit States such as Gujarat, U.P., Maharashtra, Tamil Nadu, Punjab, Andhra, Telangana and Odisha.
  • Applicants would have two years as investment period and 2024-2025 would be the ‘performance’ year. The incentive flow would start in 2025-2026 and extend for five years.

H. For auto sector: Approved a Rs. 26,058 crore production-linked incentive (PLI) scheme to enhance manufacture of advanced technology and green vehicles, auto parts and drones.

  • Benefits: It will attract Rs. 42,500 crore in fresh investment into the automobile and auto components industry over five years
  • It will help create more than 7.5 lakh jobs.
  • The scheme has been devised for both existing automotive firms and new investors.
  • The ‘sales value linked’ scheme includes a ‘champion OEM’ incentive applicable on battery electric vehicles and hydrogen fuel cell vehicles.
  • A ‘component champion’ incentive is for advanced automotive technology components.

I. For Drone Industry:

  • Will incentivize emergence of Advanced Automotive Technologies global supply chain in India
  • Help create additional employment of over 7.6 lakh people
  • Incentives worth ₹ 26,058 crore will be provided to industry over five years
  • It will bring fresh investments of over₹5,000 crore in three years and incremental production of over ₹ 1,500 crore

J. For The Advanced Chemistry Cell (ACC) Battery Storage

  • Aim: To achieve a manufacturing capacity of 50 GigaWatt Hour of ACC and five Giga Watt Hour of Niche ACC with an outlay of 18,100 crore.
  • ACCs are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required. 
  • It will also give a big push to electric mobility, benefiting three-wheelers, four-wheelers and heavy vehicles.
  • India is currently importing Battery Storage Equipment 

K. National Programme on High Efficiency Solar PV Modules: For achieving manufacturing capacity of Giga Watt (GW) scale in high efficiency solar PV modules with an outlay of Rs.4,500 crore.

  • Solar PV manufacturers will be selected through a transparent competitive bidding process.
  • PLI will be disbursed for 5 years after commissioning of solar PV manufacturing plants, on sales of high efficiency solar PV modules.

The outcomes/ benefits expected from the scheme:

  • Additional 10,000 MW capacity of integrated solar PV manufacturing plants
  • Direct investment of around Rs.17,200 crore in solar PV manufacturing projects
  • Demand of Rs.17,500 crore over 5 years for ‘Balance of Materials’
  • Direct employment of about 30,000 and Indirect employment of about 1,20,000 persons
  • Import substitution of around Rs.17,500 crore every year
  • Impetus to Research & Development to achieve higher efficiency in solar PV modules.

L. For White Goods (Air Conditioners and LED Lights) – with a budgetary outlay of Rs. 6,238 crore.

  • Shall extend an incentive of 4% to 6% on incremental sales of goods manufactured in India for a period of five years to companies engaged in manufacturing of Air Conditioners and LED Lights.
  • An entity availing benefits under any other PLI Scheme of Govt. India will not be eligible under this scheme. 
  • It will be implemented as a pan India scheme. 
  • A number of global and domestic companies, including a number of MSMEs are likely to benefit from the Scheme.
  • It is estimated that over the period of five years, the PLI Scheme will lead to incremental investment of Rs. 7,920 Crore, incremental Production worth Rs. 1,68,000 Crore, exports worth Rs 64,400 Crore, earn direct and indirect revenues of Rs 49,300 crore and create additional four lakh direct and indirect employment opportunities.

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