Explain how the PLI Scheme works. What are the advantages and challenges of the scheme?

October 20, 2023 February 21, 2024

The Production Linked Incentive (PLI) scheme Is an initiative of the government to boost the local production of domestic industries by providing them incentives.

PLI Scheme:

  • The government provides incentives on incremental sales from products manufactured in domestic units.
  • The government has announced this scheme to make India a manufacturing hub.

Advantages:

  • It helps to boost domestic manufacturing and reduce the reliance on imports.
  • It encourages foreign companies to set up their production units in India.
  • More employment opportunities are generated in the manufacturing sector.
  • It will boost the growth in GDP and will make it easier for India to effectively penetrate into the global supply chains.
  • It will help achieve the aim of ‘Atmanirbhar Bharat’.
  • Integrates India with global markets and boosts exports.
  • Gain strategic upper hand by focusing on crucial sectors.

Challenges:

  • There is a lack of a common set of parameters to examine the value addition by companies.
  • The target for companies to qualify for incentives or too steep.

Way forward:

The bottlenecks in the PLI scheme are needed to be removed as soon as possible to make India a manufacturing hub and reduce its reliance on China and other nations globally.

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