Production Linked Incentive (PLI) Scheme

Production Linked Incentive (PLI) Scheme: Introduction

The Central government’s ambitious Production-linked Incentive (PLI) scheme has increased investment prospects in domestic manufacturing. The scheme has been launched in 13 sectors identified by the government with a total outlay of around 2 lakh crore.The Production Linked Incentive Scheme (PLI) for large scale electronics manufacturing proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including mobile phones and specified electronic components.In the Union Budget 2021-22, presented on 1st February 2021, the Finance Minister announced an outlay of 1.97 Lakh Crores for the Production-Linked Incentive (PLI) Schemes for 13 key sectors, to create national manufacturing champions and generate employment opportunities for the country’s youth. This means that minimum production in India as a result of PLI Schemes is expected to be over US$ 500 billion in 5 years. PLI Schemes are a cornerstone of the Government’s push for achieving an ‘Atmanirbhar Bharat’.

The electronics Industry permeates all sectors of the economy and has cross-cutting economic and strategic significance. Recognizing the sector's unique dynamics, significant opportunities, and structural challenges, the Government of India notified the National Policy on Electronics (NPE) 2019 on 25.02.2019.One of the objectives of NPE 2019 is to promote domestic manufacturing in the entire ESDM value chain for economic development to achieve a turnover of over 30,00,000 crore (USD 400Billion) by 2025. This will include targeted production of 100 crore mobile phones, valued at over 14,25,000 crore (USD 190 Billion) by 2025.

What is the Production Linked Incentive (PLI) scheme?

The Production-linked Incentive is a conventional and popular strategy used by governments to boost the production of goods considered necessary for job creation, social welfare and taxation. PLIs are essentially financial incentives for businesses to augment their output. They could come in the form of tax rebates, lowered import and export duties or easier land acquisition norms.The benefits of a PLI scheme are generally passed on to the end consumers of goods in the form of lower costs. For instance, the PLI scheme for large-scale electronics manufacturing in India offers incentive to promote domestic manufacturing and draw significant investments in mobile phone manufacturing and distinctive electronic components like the ATMP (Assembly, Testing, Marking and Packaging) units. The scheme will have a huge positive impact on the electronics manufacturing segment and will support the country to establish itself as a global leader in the segment.

Similarly, while electric vehicles (EVs) do not have an immediate demand, a shift to greener vehicles is necessary for the country's future. The government has a programme called the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme to drive the adoption of electric-powered vehicles.There are numerous benefits for EV manufacturers under this scheme including a direct subsidy to consumers who purchase an EV.Some of the identified sectors for PLI scheme are electronic or technology products, high-efficiency solar modules, specialty steel, pharmaceutical drugs, telecom & networking products, food products, automobile and auto components, textile manufacturing and advanced chemistry cell battery.


During the COVID-19 pandemic, it was clearly visible that most of the countries around the world including India were overly dependent on a single country for electronic hardware and components imports. Sudden events can cause a large-scale shortage of electronic components and disrupt manufacturing.It is important to promote indigenous production and reduce dependency on a single market or geographical region. The PLI Scheme was rolled out to effectively integrate India’s manufacturing capabilities with the demands of global supply chains and to promote domestic value addition and exports.The scheme aims to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities in the country for developing core components, including chipsets, and creating an enabling environment for the industry to compete globally.