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Centre to expand scope of production linked incentive scheme

Thursday, 06 Aug 2020
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The Central government has proposed to expand the scope of the production linked incentive (PLI) scheme to five or six more sectors, in a bid to boost manufacturing in the country. These include--air conditioners and TV sets, leather, chemicals, furniture, tyres and toys.

The Ministry of Finance along with the Commerce and other ministries, are finalising the contours of the PLI scheme for each identified area of manufacturing and an announcement could be made over the next few weeks.

The PLI scheme for new sectors will be similar to the ones announced by the Electronics Ministry for development of a mobile manufacturing ecosystem in the country and another Rs 7,000 crore scheme by the Chemicals and Petrochemicals Ministry for the pharmaceutical sector for manufacturing bulk drugs and active pharmaceutical ingredients (APIs).

The new scheme will replace the existing Merchandise Exports India Scheme (MEIS), introduced in April 2015, with the objective to promote manufacturing and exports of specified goods from India.
The focused and efficient scheme like PLI has been identified as part of 'Aatmanirbhar Bharat' mission that aims to work on import substitution and enhance domestic manufacturing. Five more sectors may be added under PLI soon.

The government is looking at expanding the PLI scheme to boost manufacturing of air conditioners and TV sets where some level of manufacturing exists in the country but a lot of components are still imported. The PLI will ensure that the complete ecosystem around the product category develops locally.

A similar scheme is also on the anvil for expanding domestic manufacturing of solar equipment that currently is largely imported from China.

Similarly, the Department for Promotion of Industry and Internal Trade (DPIIT) has identified sectors such as tyres, chemicals, furniture, and toys that have the potential to develop local scale to expand the reach of 'Made in India' goods across the globe.

The PLIs for several sectors will be ready before the end of 2020. The existing PLI for mobile manufacturing offers incentives to the tune of four-six percent for incremental investment and sales over a period of five years to companies.

Similar schemes could be worked for new sectors but the quantum of benefit will depend on capital intensity of an industry.

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