Status of Production-Linked Incentive
Schemes
Minimum production in India as a result of PLI Schemes is expected to be over US$ 500
billion in 5 years;
Nine PLI schemes have been
approved by the cabinet so far
Posted On: 07 APR
2021 4:39PM by PIB Delhi
In the Union Budget 2021-22, presented on
1st February 2020, the Finance Minister announced an outlay of INR 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.
PLISchemes are a cornerstone of the Government’s push for achieving an Atmanirbhar Bharat.The objective is to make domestic
manufacturing globally competitive and to create global Champions in manufacturing.
Thestrategy behind schemeis
to offer companies incentives on incremental sales from products manufactured
in India, over the base year. They have been specifically designed to
boost domestic manufacturing in sunrise and strategic sectors, curb cheaper
imports and reduce import bills, improve cost competitiveness of domestically
manufactured goods, and enhance domestic capacity and exports.
The first three PLI Schemes were approved earlier in March, 2020 and these were followed by
another 10 New PLI Schemes in November, 2020. Of these, the previous three
Schemes have been notified, and six of the ten New Schemes havealso been approved by the Cabinet as below:
i.
Electronic/Technology Products – MeitY(notified on 3 March
2021)
ii.
Pharmaceuticals drugs – D/o
Pharmaceuticals(notified on 3 March 2021)
iii.
Telecom & Networking Products
- D/o Telecommunications(notified
on 24 Feb 2021)
iv.
Food Products -Ministry of Food Processing Industries
v.
White Goods (ACs & LED)
– DPIIT
vi.
High Efficiency Solar PV Modules -MNRE
Another four Schemes
are in process of obtaining Cabinet approval as below:
i.
Automobiles & Auto Components
– D/o Heavy Industry
ii.
Advance Chemistry Cell (ACC)
Battery – D/o Heavy Industry
iii.
Textile Products: MMF segment
and technical textiles – M/o Textiles
iv.
Specialty Steel -M/o Steel
It is to be noted that of
the previously notified 3 PLI Schemes, the update on their implementation
is as below:
·
MeitY: Mobile Manufacturing and Specified Electronic Components –
16 applications worth Rs. 35,541 crore under
this scheme have been approved.
·
D/o Pharmaceuticals : Critical Key Starting materials/Drug Intermediaries and Active Pharmaceutical
Ingredients –47 applications with committed investment of
Rs. 5,400 crore have finally been approved.
·
D/o Pharmaceuticals: Manufacturing
of Medical Devices –14 applications are approved with committed
investment of Rs. 873.93 crore
I.
Status of Previously Notified
PLI Schemes (3) is given below:
A.
MeitY - Mobile Manufacturing and Specified Electronic Components
i.
Major achievements in PLI being
implemented: The scheme extends an incentive
of 4% to 6% on incremental sales for a period of five years subsequent to the base
year. The scheme was notified on 01.04.2020; last date for application was
31.07.2020 and the scheme commenced on 01.08.2020. The scheme has received a very encouraging response.16 applicationswere approved under the first round of the scheme
(5 companies under Global Champions Category, 5 companies under Domestic Champions
Category and 6 companies under the Electronic Components category) with an incentive
outlay of INR 36,440 crore. As per the Quarterly Review Reports for the quarter ending December
2020, in the first 5 months of scheme operation and despite challenging times, the
applicant companies have produced goods worth ~INR 35,000 crore and invested ~INR
1,300 crore under the scheme. Additional employment generation during this period
stands at around 22,000 jobs.
After the success of the First
Round of PLI Scheme, the Second Round of PLI Scheme has been launched on 11.03.2021,
which focuses on building a vibrant and robust electronic component manufacturing
ecosystem. The last date for application was 31.03.2021. Under the Second Round,
incentive of 5% to 3% shall be extended on incremental sales (over base year, i.e.,
2019-20) of goods manufactured in India and covered under the target segment, to
eligible companies, for a period of four years. Applications
received under the Second Round of PLI Scheme for Large Scale Electronics Manufacturing
are in the process of appraisal.
ii.
Response of major industry leaders
for products: The approved companies under the PLI Scheme for Large Scale Electronics
Manufacturing include Samsung, Foxconn Hon Hai, Rising Star, Wistron and Pegatron. Out of these,
3 companies namely Foxconn Hon Hai, Wistron and Pegatron are contract manufacturers for Apple iPhones. Apple
(37%) and Samsung (22%) together account for nearly 60% of global sales revenue
of mobile phones and this scheme is expected to increase their manufacturing base
manifold in the country. Indian companies including Lava, Bhagwati
(Micromax), Padget Electronics,
UTL Neolyncs and Optiemus Electronics
were approved under the scheme. These companies are expected
to expand their manufacturing operations in a significant
manner and grow into national champion companies in mobile phone production.
iii.
What kind of value addition
will be brought in by the PLI- new types of industries, encouragement
to MSMEs/ancillarisation, etc:
The PLI Scheme for Large Scale Electronics Manufacturing also focuses
on building a vibrant and robust electronic components manufacturing ecosystem.
This step will further strengthen product manufacturing in India for multiple sectors
such as IT Hardware, LED Products, Automotive, Medical Devices, Solar Cells, Energy
Storage, etc. for which other PLI Schemes are going to be implemented.
iv.
Expected outcomes in terms of
increase in investment, production, exports and employment: Over the next five years, the Scheme is expected to lead to a total
production of about INR 10.5 lakh crore. More than 60% of production is expected
to be exported. The scheme is also expected to bring in additional investment of
INR 11,000 crore. Value addition is expected to go up from 20-25% presently to 35-40%
by 2025. The scheme will generate approximately 2 lakh direct employment opportunities
in next 5 years along with creation of additional indirect employment of nearly
3 times the direct employment.
B.
D/o Pharmaceuticals - Critical
Key Starting Materials (KSMs)/ Drug Intermediates And Active Pharmaceutical Ingredients
(APIs)
i.
Major achievements in PLI
being implemented: With an objective to attain
self-reliance and reduce import dependence in these critical Bulk Drugs - Key Starting
Materials/ Drug Intermediates and Active Pharmaceutical Ingredients in the country,
the Department of Pharmaceuticals had launched a Production Linked Incentive (PLI)
Scheme for promotion of their domestic manufacturing by setting up greenfield plants
with minimum domestic value addition in four different Target Segments (In Two Fermentation
based - at least 90% and in the Two Chemical Synthesis based – at least 70% ) totaling
41 products with a total outlay of Rs. 6,940 cr. for the
period 2020-21 to 2029-30.
ii.
Response of Industry Leaders:
In the PLI Scheme for Bulk Drugs, the major successful players/ participants
include M/s. Aurbindo Pharma Group, M/s. Hetero Group,
M/s. Karnataka Antibiotics and Pharmaceuticals Limited, M/s. KinvanPvt. Ltd, M/s. Natural Biogenex
Private Limited, etc. These include global players with strong presence in advanced
markets.
iii.
Expected outcomes in terms of
increase in investment, production, exports and employment: In total 215 applications have been received for the 36 products spread
across the 4 Target Segments for the PLI schemes for Bulk Drugs from all over the
country. Out of these, 47 applications have
been approved by the Government, with a total Committed Investment of Rs. 5,366.35; Maximum Incentive proposed for disbursement: Rs. 6,000 crore and Expected Employment Generation of about
12140.
C.
D/o Pharmaceuticals - Manufacturing
Of Medical Devices
i.
Major achievements
in PLI being implemented: With an objective to boost
domestic manufacturing, attract large investment in Medical Device Sector, the Department
of Pharmaceuticals had launched a Production Linked Incentive (PLI) Scheme for Promotion
of Domestic Manufacturing of Medical Devices to ensure a level playing field for
the domestic manufacturers of medical devices with a total financial outlay of Rs.3,420
cr. for the period 2020-21 to 2027-28.
ii.
Response of Industry Leaders:
In the PLI Scheme for Medical Devices, the major successful
players/ participants include M/s. Siemens Healthcare Private Limited, M/s. Wipro
GE healthcare Private Limited, M/s BPL Medical Technologies Private limited, M/s
Nipro India Corporation Private Limited, M/s. Sahajanand Medical Technologies Private Limited, M/s. Integris Health Private Limited, M/s. Poly Medicure Limited, etc.
iii.
Expected outcomes in terms of
increase in investment, production, exports and employment: In total 28 applications have been received spread across the 4
Target Segments for the PLI schemes for Medical Devices from all over the country. Out of these, 14 applications have been approved
by the Government, with a total Committed Investment of Rs.873.93 crore; Maximum
Incentive proposed for disbursement: Rs.1,694 crore and
Expected Employment Generation of about 4212.
II. Status of recently approved
PLI Schemes (6) is given below:
A.
DPIIT - White Goods (ACs & LED)
1.
i.
Major achievements in PLI
being implemented:The PLI Scheme for White Goods
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. PLI Scheme is designed to create complete component
ecosystem in India and make India an integral part of the global supply chains.
The scheme will be instrumental in making manufacturing in India globally competitive
by removing sectoral disabilities, creating economies of scale and ensuring efficiencies.
The scheme is expected to attract global investments, generate large scale employment
opportunities and enhance exports substantially. It will also lead to investments
in innovation and research and development and upgradation of technology.The Scheme is expected to be instrumental in achieving
growth rates that are much higher than existing ones for AC and LED industries,
develop complete component eco-systems in India and create global champions
manufacturing in India. A number of global and domestic companies, including a number
of MSMEs are likely to benefit from the Scheme.
ii.
Response of the major Industry
leaders for products under PLI: The Scheme has been prepared in consultation with relevant stakeholders
such as manufacturers of Air Conditioners and LED Lights Manufacturers and related
Industry Associations and they are looking forward to the scheme being launched.
o
iii. How to undertake global
reach: Promotion of the scheme overseasspecifically
targeted at identified global majors in relevant fields by Project
Development Cell (PDC) of DPIIT, in coordination with Invest India. This
would also include disseminatingmailers to the Embassies
of India in home countries of identified global majors in ACs and LED Lights industry.
This would be followed by Workshops/ Webinars by CII, FICCI, ASSOCHAM, RAMA,
CEAMA and ELCOMA for raising awareness about the scheme.
o
iv. Value addition bought
in by the PLI: As per the Industry, the Value
addition for AC Industry will increase from current level of 20-25% to
75% and for LED Lights Industry from 40% to 70-75%; This would
also result in starting manufacturing of components or sub-assemblies which are
not manufactured in India presently
v.
Outcome of 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.
B.
MNRE - High Efficiency Solar PV Modules
i.
Major achievements in PLI
being implemented by Department/Ministry: Presently,
solar capacity addition in the country depends largely upon imported solar PV cells
and modules as the domestic manufacturing industry has limited operational capacities
of solar PV cells and modules. Major achievement of this PLI Schemefor High Efficiency Solar PV Modules is the likely reduction
of import dependence in a strategic sector like electricity.
ii.
Response of major industry
leaders for products under PLI: Industry stakeholders, consulted
at the preparation stage of this Scheme, have shown overwhelming response, and are
willing to set-up large, vertically integrated manufacturing capacitieswhich will help to achieve economies of scale, thereby
becoming globally competitive.
·
iii. How to undertake global
reach:In order to undertake global reach of this Scheme, MNRE will again
interact with global industry leaders, write to various solar manufacturer’s associations,
as well as requesting the various Indian embassies abroad to inform the potential
investors in their respective countries.
·
iv. What kind of value addition
will be brought in by the PLI – new types of industries, encouragement to MSMEs/ancillarisation etc.:Manufacturers will be incentivized for higher efficiencies of solar PV modules
and also for sourcing their material from the domestic market. Thus, the PLI Scheme
willhelp not only in setting up of domestic manufacturing
capacities in upstream stages of solar PV manufacturing, like polysilicon and wafers
which are presently absent in the country, but is likely to augment the entire
solar PV manufacturing ecosystem, including boost toancillary
units and MSMEs.
v.
Expected outcomes in terms
of increase in investment, production, exports and employment: The outcomes/ benefits expected from the scheme are - Additional
10,000 MW capacity of integrated solar PV manufacturing plants.; Direct investment
of around 17,200 crore in setting up solar PV manufacturing projects; Direct employment
of about 30,000 and Indirect employment of about 1,20,000 persons; Import substitution
of around 17,500 crore every year; Demand of 17,500 crore over 5 years for 'Balance
of Materials' such as, Solar Glass, EVA, Backsheet,
Junction Box, Ribbon etc. will lead to development of new types of industries where
MSMEs will play a major role; Provideimpetus to Research
& Development to achieve higher efficiency in solar PV modules.
C.
MoFPI – Food Products
1.
i.
Major achievements in PLI
being implemented by Department/Ministry:Production Linked Incentive Scheme for Food Processing Industry was approved
by the Cabinet on 31.3.2021 for implementation during 2021-22 to 2026-27 with an
outlay of Rs 10,900 crore. The scheme is essentially meant
for Indian companies and subsidiaries of MNCs operating in India with minimum sales
of food products manufactured in India. The scheme will encourage investment in
four food segments viz. Ready to Cook/ Ready to Eat (RTC/RTE) including millet based
foods, Processed Fruits & Vegetables, Marine Products, Mozzarella Cheese. The
objective of the scheme is to support creation of global food manufacturing champions;
support Indian brands of value-added food products in the international markets;
increase employment opportunities for off-farm jobs and ensuring remunerative prices
of farm produce and higher income to farmers.
1.
ii.
Response of major industry
leaders for products under PLI: The scheme has been well received
by the Industry including Nestle, ITC, Britannia, KeventerAgro,
andAmul.
o
iii. How to undertake global
reach: Companies would be reached out
through Indian Missions abroad. Industry Associations would be supporting to organise Webinar to attract potential investors to avail opportunities
under PLIS.
o
iv. What kind of value addition
will be brought in by the PLI – new types of industries, encouragement to MSMEs/ancillarisation etc.:As the incentive is based on sales, subject to minimum investment,
higher value addition is inbuilt in the scheme. Further, product specific incentive
is extended for value added Marine products viz. Canned, Battered & breaded,
Pickles, Sausages etc. Role of contract Manufacturing has been recognized under
the scheme and the scheme provides for Investment criteria to be met by the food
majors and their contract manufacturers jointly. These products are extended 10%
incentives for all the six years of scheme duration.Small
and medium enterprises (SME), in the four segments will also be supported for manufacture
innovative and organic products. This segment has been earmarked an outlay of Rs. 250 crore.The scheme envisages
for holistic development of the sector.
v.
Expected outcomes in terms
of increase in investment, production, exports and employment: The outcomes/ benefits expected from the scheme are - Expansion
of food processing capacity:Rs
33,494 crore; Exports: Rs 27,816 crore; Generation
of employment: 2.5 lakh persons.
D.
D/o TELECOM - Telecom & Networking Products (Notified)
i.
Major achievements in PLI being
implemented by DoT: Department of Telecommunications
has notified the PLI Scheme for Telecom and Networking products on 24th
February 2021 with financial outlay of Rs. 12,195 Crores,
over five years for Telecom and Networking Products. PLI Scheme in Telecom and Networking
Products will make India a global hub of manufacturing telecom equipment including
Core Transmission Equipment, 4G/5GNext Generation Radio Access Network and Wireless
Equipment, Access & Customer Premises Equipment (CPE), Internet of Things (IoT) Access Devices, Other Wireless Equipment and Enterprise
equipment like Switches, Routers etc.
The investor will be incentivized
for incremental sales up to 20 times the committed investment enabling them to reach
global scales and utilize their unused capacity and ramp up production. The core
component of this Scheme is to offset the huge import of telecom equipment
worth more than Rs. 50 thousand crores and reinforce it
with “Made in India” products both for domestic markets and exports. The target
is to Make India a preferred global manufacturing destination for telecom
products and making India a net exporter of telecom and networking
products.
ii.
Response of major industry leaders
for products: Most of the world telecom industry
leaders are keen to expand or set up manufacturing base in India and are positive
with the kind of incentives proposed in the Scheme. The companies like EricssonSweden and Nokia Finland are keen to expand their existing
operation in India for global supply chain. Global telecom companies like Samsung
South Korea, Cisco USA, Ciena USA, and Engineering Manufacturing
Services (EMS) companies like Jabil USA, Foxconn Taiwan, Sanmina USA& FlexUSA have shown interest to set up manufacturing in India
for Telecom & Networking Products for domestic as well as export markets. Indian
manufacturers like VVDN Technologies Gurugram, Dixon Noida,
HFCL, Coral Telecom& Sterlite
have also shown interest in the Scheme.
iii.
How to undertake global reach:
An extensive outreach program with the support of Invest India
team for the Scheme is being planned, covering - One to one meeting with potential
investors; Participation in global outreach events organized by industry associations;
Webinars with Consultants& Embassy officials, Law firms/ banks// research organisations/ industry associations; Creation of collaterals/flyers
for the scheme in different languages; Microsite for the scheme on Invest India
website.; Separate interactive website for Applications as well as selected vendors
for the entire Scheme interface; Support translation of scheme into multiple languages.
iv.
What kind of value addition
will be brought in by the PLI- new types of industries, encouragement to MSMEs/ancillarisationetc.: The Scheme
is investment linked which will enable the vendors to invest in backward integration
thereby increasing the value addition in country. Global vendors will bring in their
component suppliers and develop ancillaries. The scheme has a special category for
MSME recognisingthe fact that MSMEs play an important
role in the telecom manufacturing eco system. For MSMEs, one percent (1%) higher
incentive is proposed in initial 3 years.Minimum Investment
threshold for MSME has been kept at Rs. 10 crore.
v.
Expected outcomes in terms of
increase in investment, production, exports and employment: It is estimated that full utilisation of
the Scheme funds is likely to lead to incremental production of around ₹ 2.4
Lakh crore with exports of around ₹ 2 Lakh crore over 5 years. It is also
expected that Scheme will bring investment of around ₹ 3,000 crore and generate
huge direct and indirect employment.
E.
MEITY- IT Hardware (Notified)
i.
Major achievements in PLI
being implemented by Ministry of Electronics and Information Technology: The PLI Scheme for IT Hardware was notified on 03.03.2021. The last
date for application is 30.04.2021.The scheme shall extend an incentive of 4% to
2% / 1% on net incremental sales (over base year) of goods manufactured in India
and covered under the target segment (Laptop, Tablets, All in one PCs, Servers)
to eligible companies, for a period of four years.The
scheme is likely to benefit major global as well as domestic manufacturers of IT
hardware products, namely, Laptops, Tablets, All-in-One PCs, and Servers. This is
an important segment to promote manufacturing as there is huge import reliance for
these items at present.
ii.
Response of Industry Leaders:
·
iii. Undertaking Global Reach: The Global outreach plan mainly
includes a two pronged approach. I) Identification and focused approach to Global
Champion companies - The decision makers of global champion companies are identified
and reach out is done through various channels, e.g., Indian Embassies abroad, Foreign
Embassies in India, Electronics Industry Associations, Bank networks, Consultants,
Supply chain companies, etc. One-to-one physical or VC meetings are conducted at
various levels involving Minister, Secretary and Joint Secretary MeitY.The relevant materials, viz., Scheme Notification and
Guidelines are translated into foreign languages (Korean, French, German, Mandarin,
Japanese, Hebrew, etc.) and are shared with relevant stakeholders for wider dissemination.
II) Promotion of the schemes through relevant stakeholders to reach a greater
audience - Various Webinars, Round table and Panel discussions are organised through various stakeholders, like Indian Embassies
abroad, Foreign Embassies in India, Electronics Industry Associations, OEMs and
their Supply chain partners, Banks and consultant networks, etc. where details of
the schemes are explained through Presentation and Q&A sessions. This approach
helps in reaching out to new companies.
·
iv. What kind of value addition will be brought in by the PLI- new types
of industries, encouragement to MSMEs/ancillarisationetc:. The scheme is likely to benefit major global as well as domestic manufacturers
of IT hardware products, namely, Laptops, Tablets, All-in-One PCs, and Servers.
This is an important segment to promote manufacturing as there is huge import reliance
for these items at present.
v.
Expected outcomes in terms of
increase in investment, production, exports and employment: Over the next 4 years, the PLI Scheme for IT Hardware is expected to
lead to total incremental production of up to INR 3,26,000 crore, out of
which more than 75% is expected to be exported. Also, it is expected that Domestic
Value Addition for IT Hardware will rise to 20% - 25% by 2025 from the current
5% - 10%, due to the impetus provided by the scheme. The scheme will generate approximately 1.8 lakh employment
opportunities in next 4 years.
F.
M/o Pharmaceuticals -Pharmaceuticals drugs (Notified)
i.
Major Achievements in PLI
Being Implemented by Department/Ministry: The scheme is at initial
stage of implementation. It was approved by Cabinet on 24.02.2021. The scheme guidelines
have been drafted and are in the process of issuance for inviting applications.
The guidelines are proposed to be issued in the ongoing week.
ii.
Response of Major Industry
Leaders for Products Under PLI: Response can be ascertained after the issuance of guidelines and
response in terms of applications which will be received under the scheme.
iii.
How to Undertake Global Reach:
Consultations have been done with Pharma associations which represents
interests of foreign MNCs in India. Few foreign MNCs are expected to participate
in the scheme.
iv.
What Kind Of Value Addition
Will Be Brought In By the PLI – New Types Of Industries,
Encouragement To MSMEs/Ancillarisation Etc: The PLI scheme envisages product
diversification and incentives will be given for efforts of the participants which
go for high value added products which are listed under the scheme. It also envisages
to make the country self-reliant in many of the intermediate products. It is proposed
to meet the objective of enhance manufacturing capabilities in the country by supporting
firms with the potential of becoming global champions. However, given the nature
of the sector, there will also be a provision for supporting some MSMEs within the
Scheme.
v.
Expected Outcomes In Terms
Of Increase In Investment, Production, Exports And Employment: The expected outcomes (approx.) under the scheme (cumulative over
a period of 6 years) are as follows-
·
Incremental sales- Rs 2,94,000 crore
·
Exports- Rs 1,96,000 crore
·
Investments- Rs 15,000 crore
·
Employment- 1,00,000 jobs