October 17, 2022

7 New Production Linked Incentive (PLI) Scheme | Micro Small and Medium Enterprises (MSMEs) are real beneficiaries

Production Linked Incentive (PLI) Schemes are benefits provided by the government to manufacturing industries based on their production to promote manufacturing in India. Till now the government has spent thousands of crores of rupees under the PLI scheme offered for different sectors such as the Telecom Industry, Textile industry, etc. Benefits can be provided in form of grants, subsidies, tax holidays, etc.

On 1st October, The government announced 7 new PLI schemes which are not part of the original program, and these schemes are provided to promote manufacturing in India. As per government officials, the PLI scheme has been very well received. The idea behind PLI was to promote those champion sectors where we have comparative and competitive advantages. However, we must get out of the mindset of subsidies and build a resilient and self-reliant business ecosystem that is not dependent on the government.

Small and Medium Enterprises (MSMEs) are the real beneficiaries of the new PLI scheme because when a large industry came up, it brought with it a whole ecosystem of manufacturers and service providers. As per government officials, every PLI scheme is very carefully and thoroughly assessed in collaboration with Industry before being formulated. However, PLI is just a kick-start mechanism and therefore needs to have a sunset clause as ultimately the industry needs to be viable and independent.

Sectors for the new PLI scheme are yet to be announced.

PLI Scheme so Far

PLI scheme was announced for the very first time in March 2020 with an outlay of INR 1.97 Lakhs crores benefiting 14 key sectors.
The scheme was introduced with the objective of creating national manufacturing champions and creating 60 lakhs new jobs and additional production of INR 30 Lakh crores during the next 5 years.
Initially, the scheme was announced for the following 3 sectors in March 2020:
- Mobile and allied Component Manufacturing
- Electrical Component Manufacturing and
- Medical Devices.
Later on, it covered 10 new sectors in November 2020.
Later on, in September 2021, the PLI scheme covered one more sector namely Drones and Drone Components: Ministry of Civil Aviation.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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