Production Linked Incentive(PLI) Scheme for electronics manufacturers – UPSC Prelims

What is the PLI scheme?

• As a part of the National Policy on Electronics, the IT ministry had notified the PLI scheme on April 1 this year.
• The scheme will, on one hand, attract big foreign investment in the sector, while also encouraging domestic mobile phone makers to expand their units and presence in India.
• It would give incentives of 4-6 per cent to electronics companies which manufacture mobile phones and other electronic components.
• A/c to the scheme, companies that make mobile phones which sell for Rs 15,000 or more will get an incentive of up to 6 per cent on incremental sales of all such mobile phones made in India.
• In the same category, companies which are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crore for the next four years.

Tenure of the scheme

• The PLI scheme will be active for five years with financial year (FY) 2019-20 considered as the base year for calculation of incentives.
• This means that all investments and incremental sales registered after FY20 shall be taken into account while computing the incentive to be given to each company.

Which companies and what kind of investments will be considered?

• All electronic manufacturing companies which are either Indian or have a registered unit in India will be eligible to apply for the scheme.
• These companies can either create a new unit or seek incentives for their existing units from one or more locations in India.
• Any additional expenditure incurred on the plant, machinery, equipment, research and development and transfer of technology for the manufacture of mobile phones and related electronic items will be eligible for the incentive.
• However, all investment done by companies on land and buildings for the project will not be considered for any incentives or determine the eligibility of the scheme.