Production Linked Incentive Scheme (PLI) | UPSC

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Production Linked Incentive Scheme (PLI) | UPSC

Production Linked Incentive Scheme (PLI) | UPSC

      HEADLINES:

Production Linked Incentive Scheme (PLI) to herald a new era in mobile phone and electronic components manufacturing.

      WHY IN NEWS:

Hot from PIB !

MINISTRY? :-Ministry of Electronics & IT
SYLLABUS COVERED: GS 3: Schemes

      LEARNING: 

For PRELIMS go through aim , incentive , funding , outlay and the beneficiaries. Do not forget the ministry !

For MAINS what are issues Indian Mobile companies are facing ?

      ISSUE: 

Ministry of Electronics and IT gives its approval to 16 eligible applicants under the PLI Scheme

PRODUCTION LINKED INCENTIVE SCHEME (PLI)

The domestic electronics hardware manufacturing sector faces lack of a level playing field towards competing nations.

The sector suffers disability of around 8.5% to 11% on account of :

  • Lack of adequate infrastructure
  • Domestic supply chain and logistics
  • High cost of finance
  • Inadequate availability of quality power
  • Limited design capabilities and focus on R&D by the industry;
  • Inadequacies in skill development.

OVERVIEW

  • Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing was notified on 1st April,2020.

Industry has reposed its faith in India’s stellar progress as a world class manufacturing destination.

  • This resonates strongly with Prime Minister’s clarion call of AtmaNirbhar Bharat – a self-reliant India.

AIM

  • The vision of National Policy on Electronics 2019 (NPE 2019) is to position India as a global hub for Electronics System Design and Manufacturing (ESDM).
  • This is by encouraging and driving capabilities for developing core components in the country
  • This will creating an enabling environment for the industry to compete globally.

PLI Scheme offers a production linked incentive to boost domestic manufacturing.

  • This will attract large investments in mobile phone manufacturing.

TARGET SEGMENTS ELIGIBLE UNDER PLI SCHEME

Mobile Phones

Specified Electronic Components

  • SMT components
  • Discrete semiconductor devices including transistors, diodes, thyristors, etc.
  • Passive components including resistors, capacitors, etc. for electronic applications
  • Printed Circuit Boards (PCB), PCB laminates, prepregs, photopolymer films, PCB printing inks
  • Sensors, transducers, actuators, crystals for electronic applications
  • System in Package (SIP)

Micro / Nano-electronic components such as Micro Electromechanical Systems (MEMS)

  • Nano Electromechanical Systems (NEMS)
  • Assembly, Testing, Marking and Packaging (ATMP) units

TENURE OF THE SCHEME

Five years subsequent to the base year as defined (FY 19-20).

INCENTIVE

  • Incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India.

OUTLAY

  • Total Incentive: The expected annual incentive outlay and cumulative incentive outlay under the
    Scheme is as follows,

In INR Crore # Year 1 : 5,334 , Year 2 L 8,064 , Year 3 : 8,425 , Year 4 : 11,488 , Year 5 : 7,640 , Total : 40,951.

INCENTIVE PER COMPANY

  • The incentive per company will be applicable on incremental sales of manufactured goods (as distinct from traded goods).
  • Also it will be subjected to base year to ceilings as decided by the Empowered Committee.

ELIGIBILITY

  • Eligibility shall be subject to thresholds of incremental investment and incremental sales of manufactured goods.

Production Linked Incentive Scheme (PLI) | UPSC

SOURCES : INVEST INDIA

APPROVAL AND DISBURSEMENT PROCESS

Application under the Scheme can be made by any company registered in India.

  • An initial application, complete in all aspects, will have to be submitted before the due date.
  • Acknowledgement will be issued after initial scrutiny of the application by MEITY.
  • The Scheme is open for applications for a period of 4 months initially which may be extended.
  • Financial Year 2019-20 shall be treated as the base year for computation of incremental investment.

SIGNIFICANCE

  • EXPECTED OUTCOMES : Production of Rs. 10.5 lakh crore and Exports of Rs. 6.5 lakh crore expected over next 5 years.
  • NATIONAL PLAYERS : Indian companies include Lava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Optiemus Electronics

These companies are expected to expand and grow into national champion companies in mobile phone production.

  • INTERNATIONAL PLAYERS : The international mobile phone manufacturing companies ; Samsung, Foxconn Hon Hai, Rising Star, Wistron and Pegatron.
  • GLOBAL SHARE : Apple (37%) and Samsung (22%) together account for nearly 60% of global sales revenue of mobile phones.
  • PROMINENCE : This scheme is expected to increase their manufacturing base manifold in the country.
  • VOCAL TO LOCAL : Creation of domestic champion companies in electronics manufacturing under the Scheme will give fillip to vocal for local while aiming for global scale.
  • DOMESTIC VALUE ADDITION : It is expected to grow from the current 15-20% to 35-40% in case of Mobile Phones and 45-50% for electronic components.
  • EMPLOYMENT : The companies approved under the scheme will generate more than 2 lakh direct employment opportunities in next 5 years.

      IASbhai WINDUP: 

  • The National Policy on Electronics 2019 envisions positioning India as a global hub for Electronics System Design and Manufacturing (ESDM).
  • National policy on Electronics focuses on size and scale, promoting exports at international level.

Its aim is to enhance domestic value addition by creating an enabling environment for the industry to compete globally.

  • PLI scheme has been huge success in terms of the applications received from Global as well as Domestic Mobile Phone manufacturing companies .
  • India has witnessed an unprecedented growth in electronics manufacturing in the last five years.
  • This will further give a major boost to Prime Minister’s Make in India and AtmaNirbhar Bharat.
     SOURCES: PIB | Production Linked Incentive Scheme (PLI) | UPSC

DISCOVER MORE : SCHEMES

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