The Production-Linked Incentive (PLI) scheme — launched in March 2020 to make the manufacturing sector globally competitive — is an important step towards fulfilling the government's vision of Atmanirbhar Bharat. It aims to remove sectoral disabilities, create economies of scale and ensure efficiencies.

Hon'ble Finance Minister, Smt Nirmala Sitharaman has announced an outlay of INR 1.97 Lakh Crores for the Production Linked Incentive (PLI) Schemes across 13 key sectors, to create national manufacturing champions and generate employment opportunities for the country’s youth. In addition to the three schemes announced earlier in March 2020, GoI has further introduced the following 10 new PLI schemes in November 2020

• Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs): Department of Pharmaceuticals
• Large Scale Electronics Manufacturing: Ministry of Electronics and Information Technology
• Manufacturing of Medical Devices: Department of Pharmaceuticals
• Electronic/Technology Products: Ministry of Electronics and Information Technology
• Pharmaceuticals drugs: Department of Pharmaceuticals
• Telecom & Networking Products: Department of Telecommunications
• Food Products: Ministry of Food Processing Industries
• White Goods (ACs & LED): Department for Promotion of Industry and Internal Trade
• High-Efficiency Solar PV Modules: Ministry of New and Renewable Energy
• Automobiles & Auto Components: Department of Heavy Industry
• Advance Chemistry Cell (ACC) Battery: Department of Heavy Industry
• Textile Products: MMF segment and technical textiles: Ministry of Textiles
• Specialty Steel: Ministry of Steel

 

PLI stands for “Production-Linked incentive”. The objective of PLI scheme for ‘speciality steel’ is to promote manufacturing of specialty steel grades within the country by providing financial incentives. Presently the country operates at the low end of value chain in steel manufacturing. The PLI incentive is expected to boost the domestic production of specialty steel by,

• attracting significant investment
• infusing technology and know-how
• promoting exports.

 

As a part of the National Policy on Electronics, the IT ministry had on April 1 notified a scheme which would give incentives of 4-6 per cent to electronics companies which manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electromechanical systems.

According to the scheme, companies that make mobile phones which sell for Rs 15,000 or more will get an incentive of up to 6 per cent on incremental sales of all such mobile phones made in India. In the same category, companies which are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crore for the next four years.

 

Cabinet in its meeting approved the Central Sector Scheme – “Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)” to support creation of global food manufacturing champions commensurate with India’s natural resource endowment and support Indian brands of food products in the international markets with an outlay of Rs.10900 crore.

 

Background

• The food processing sector in India encompasses manufacturing enterprises in all the segments from micro to large industries.
• India is having competitive advantage in terms of resource endowment, large domestic market and scope for promoting value added products.
• Achieving full potential of this sector would require Indian companies to improve their competitive strength vis-à-vis their global counterpart in term of scale of output, productivity, value addition and their linkages with the global value chain.
• The Production Linked Incentive Scheme for Food Processing Industry has been formulated based on the Production Linked incentive scheme of NITI Aayog under “AatmaNirbhar Bharat Abhiyaan for Enhancing India's Manufacturing Capabilities and Enhancing Exports”

 

Scheme Objectives:

• Support Food manufacturing entities with stipulated minimum Sales and willing to make minimum stipulated investment for expansion of processing capacity and Branding abroad to incentivise emergence of strong Indian brands.:
• Support creation of global food manufacturing champions;
• Strengthen select Indian brand of food products for global visibility and wider acceptance in the international markets;
• Increase employment opportunities of off-farm jobs,
• Ensuring remunerative prices of farm produce and higher income to farmers.

 

Salient features:

• Central Sector Scheme with an outlay of Rs. 10900 crore
• The first component relates to incentivising manufacturing of four major food product segments viz. Ready to Cook/ Ready to Eat (RTC/ RTE) foods including Millets based products, Processed Fruits & Vegetables, Marine Products, Mozzarella Cheese.
• Innovative/ Organic products of SMEs including Free Range - Eggs, Poultry Meat, Egg Products in these segments are also covered under above component.
• The selected applicant will be required to undertake investment, as quoted in their Application (Subject to the prescribed minimum) in Plant & Machinery in the first two years i.e. in 2021-22 & 2022-23.
• Investment made in 2020-21 also to be counted for meeting the mandated investment.
• The conditions of stipulated Minimum Sales and mandated investment will not be applicable for entities selected for making innovative/ organic products.
• The second component relates to support for branding and marketing abroad to incentivise emergence of strong Indian brands.
• For promotion of Indian Brand abroad, the scheme envisages grant to the applicant entities for - in store Branding, shelf space renting and marketing.
• Scheme will be implemented over a six year period from 2021-22 to 2026-27.

 

Implementation strategy and targets

• The scheme will be rolled out on All India basis.
• The scheme shall be implemented through a Project Management Agency (PMA).
• The PMA would, inter-alia, be responsible for appraisal of applications/ proposals, verification of eligibility for support, scrutiny of claims eligible for disbursement of incentive
• The incentive under the scheme would be paid for six years ending 2026-27. The incentive payable for a particular year will be due for payment in the following year. The duration of the scheme will be six years i.e. 2021-22 to 2026-27.
• The scheme is "fund-limited", i.e. cost shall be restricted to the approved amount. The maximum incentive payable to each beneficiary shall be fixed in advance at the time of approval of that beneficiary. Regardless of achievement/ performance, this maximum shall not be exceeded.
• The implementation of the scheme would facilitate expansion of processing capacity to generate processed food output of Rs 33,494 crore and create employment for nearly 2.5 lakh persons by the year 2026-27.

 

Administrative and Implementation Mechanisms

• The Scheme would be monitored at Centre by the Empowered Group of Secretaries chaired by the Cabinet Secretary
• Inter-Ministerial Approval Committee (IMAC) would approve selection of applicants for coverage under the scheme, sanction and release of funds as incentives.
• The Ministry will prepare Annual Action Plan covering various activities for implementation of the scheme.
• A third party evaluation and mid-term review mechanism would be built in the programme.

 

Major impact, including employment generation potential

• The implementation of the scheme would facilitate expansion of processing capacity to generate processed food output of Rs 33,494 crore and;
• Create employment for nearly 2.5 lakh persons by the year 2026-27.