What is Production Linked Incentive (PLI) Scheme by MeitY?

On April 1, Ministry of Electronics and Information Technology (MeitY) introduced PLI or Production Linked Incentive Scheme, as a part of the National Policy on Electronics. So far, 22 companies including tech giants Samsung, Apple and Flex have applied for the incentive-based scheme.
Created On: Aug 4, 2020 13:40 IST
Modified On: Aug 4, 2020 15:29 IST
Production Linked Incentive Scheme
Production Linked Incentive Scheme

After the Ministry of Electronics and Information Technology (MeitY) introduced the PLI (Production Linked Incentive) scheme, at least 22 companies including tech giants Samsung, Apple and Flex have applied for the incentive-based scheme. The Government of India seeks to boost Make in India initiative to make the country a manufacturing and export hub for mobile phones.

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What is Production Linked Incentive Scheme?

On April 1, Ministry of Electronics and Information Technology (MeitY) introduced PLI or Production Linked Incentive Scheme, as a part of the National Policy on Electronics. The scheme will give incentives between 4-6% to the electronic companies, provided that they manufacture mobile phones and other electronic and nanoelectronic components-- transistors, diodes, thyristors, resistors, capacitors, microelectromechanical systems in India. 

What is the aim of the scheme?

The scheme is aimed to attract huge foreign investments in the IT sector and will also encourage the Indian companies to expand their production units and presence in India. The PLI scheme is a huge step towards the Make in India initiative launched by the Government of India. 

How the scheme will be implemented?

The scheme will be implemented via a Nodal Agency acting as a  Project Management Agency (PMA). It will provide secretarial, managerial, and implementation support, in addition to any other roles and responsibilities assigned by MeitY. 

What is the time period of the scheme?

The time period for PLI scheme is 5 years and the FY 2019-20 will be counted as the base year. Thus, any investments and incremental sales registered after the base year will be considered at the time of calculating the incentives to the company. 

The breakup of the 5 years incentives

Below is the breakup of the five-year incentives

Year  Incentive (in crores) 
First  Rs. 5,334 
Second Rs. 8,064
Third Rs. 8,425
Fourth Rs. 11,488
Fifth Rs. 7,640
Total Rs. 40,951

It is worth mentioning that the global companies manufacturing smartphones in India will receive an incentive up to 6% on the same of Rs 15,000 crore or more. On the other hand, the Indian companies manufacturing smartphones in India will receive an incentive of Rs 200 crore for the next 4 years. 

What is the eligibility criteria?

All the Indian manufacturing companies are eligible to avail of the scheme. In addition to these, the companies having a registered manufacturing unit in India are also eligible for the scheme. The companies have an option to either set up a new unit or seek incentives for the existing ones provided that they are located in India. 

What kind of investments done by the companies will be considered?

All the investments done by the companies on the plant, machinery, equipment, research and development and transfer of technology for manufacturing mobile phones and related electronic items will be eligible for the incentive-based scheme. It is important to note that all the investments on land and buildings for the project done by the companies will not be counted for the scheme. 

Global mobile manufacturing companies that have applied under the incentive scheme are Samsung, Rising Star and three Apple contract manufacturers- Foxconn Hon Hai, Wistron and Pegatron, while the Indian companies that have shown interest are Lava, Micromax, Sixon, Sojo, Optimus and Padget Electronics. It is worth mentioning that none of the Chinese companies has applied to avail of the benefits from the incentive scheme. 

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