Production-Linked Incentive (PLI) Scheme

The Production-Linked Incentive (PLI) Scheme is an initiative by the Government of India aimed at boosting domestic manufacturing, attracting investment, and enhancing export competitiveness. Under this scheme, financial incentives are provided to companies based on their incremental production and sales in designated sectors.

Origin and Scope: Launched to strengthen India’s manufacturing ecosystem and reduce import dependence. Initially covered 13 sectors, including electronics, pharmaceuticals, textiles, and more. Total investments committed under the scheme are estimated at nearly ₹2 lakh crore.

Key Features: Incentive Based on Output Companies receive financial incentives proportional to their incremental production or turnover. Sectoral Focus Targeted at industries with high growth potential, import substitution opportunities, and export competitiveness.

Eligibility: Both domestic and foreign companies investing in the approved sectors are eligible.

Economic Benefits: Encourages local manufacturing and job creation. Strengthens supply chains within India. Promotes research, development, and innovation in priority sectors.

Example: An electronics manufacturer increases annual production in India under the PLI scheme. The government provides a percentage of incremental sales as an incentive, reducing production costs and improving profitability.