Production Linked Incentive Scheme.

 ~Preet

The NITI Aayog has recently begun work on developing a set of objective criteria to assess value creation by enterprises that get financial incentives under Production-Linked Incentive (PLI) programmes. The empowered group of secretaries, established in June 2020, was entrusted with finding bottlenecks in PLI schemes, liaising with states and firms for speedier approvals, analysing and assuring timely investments in PLI schemes, and ensuring total project turnaround. The Cabinet Secretary chairs the group, which includes the Chief Executive Officer of NITI Aayog, the secretaries of the Department of Promotion of Industry and Internal Trade, the Department of Commerce, the Department of Revenue, the Department of Economic Affairs, and the Secretary of the concerned ministry.

The NITI Aayog wants to enlist the help of an external organisation — state-owned IFCI Ltd or SIDBI – to create and prepare a centralised database to track success in the PLI projects across sectors. This database will track value addition, actual exports against committed exports, and job creation. A dashboard will also be established to identify roadblocks at the state level. There was no clear set of metrics for understanding the value addition by enterprises that have received or are anticipated to receive PLI subsidies. Currently, separate ministries monitor the value addition of their own PLI programmes, and it is impossible to compare two distinct schemes. There are also a variety of deliverables, such as the number of jobs generated, an increase in exports, and quality improvement, and there is no centralised database to track all of them. 

Departments and ministries that interface with enterprises in their industry have unique challenges. For example, the aim for enterprises to qualify for incentives might be excessively high at times. Until the end of the fiscal year, only three or four of the fourteen enterprises that had been approved had met the incremental sales criteria required to qualify for the PLI scheme. Unlike global corporations, most local companies rely on one or two supply chains that have been badly disrupted, and these companies will not qualify for the incentive due to no fault of their own.

The PLI plan was designed to increase indigenous manufacturing capabilities while also increasing import substitution and job creation. In Budget 2022-23, the government has set aside Rs 1.97 lakh crore for PLI programmes in different industries, with an extra allocation of Rs 19,500 crore for PLI for solar PV modules. The initiative, which was first announced in March 2020, initially targeted three industries: mobile and associated component manufacturing, electrical component manufacturing, and medical devices.

The incentives, computed on incremental sales, range from as little as 1% for electronics and technology items to as much as 20% for the production of crucial key beginning pharmaceuticals and certain drug intermediates. In some industries, such as advanced chemical cell batteries, textile goods, and the drone industry, the incentive will be computed based on sales, performance, and local value addition over a five-year period. 

The government has so far proposed PLI programmes for 14 industries, including automobiles and auto components, electronics and IT hardware, telecom, pharmaceuticals, solar modules, metals and mining, textiles and clothing, white goods, drones, and advanced chemical cell batteries.

This plan was implemented by the government in order to lessen India's reliance on China and other foreign countries. It promotes labor-intensive industries and strives to boost India's employment ratio. This strategy aims to cut import expenses while increasing home output. PLI Yojana, on the other hand, promotes local firms to expand their production units and welcomes international corporations to set up their units in India.