Also: PLI scheme, PLI, Production Linked Incentive
Definition
A set of central schemes launched from 2020 that pay manufacturers a cash incentive, usually a percentage of the additional sales they make in India over a base year, to attract large-scale production in chosen sectors.
Indian manufacturing has stayed stuck at about 15–17% of GDP for decades, while countries such as China, Vietnam and Bangladesh used factory jobs to pull workers out of farming. Earlier tools, from export processing zones to the 2014 Make in India campaign, improved the image of the country as a destination but did not shift the share of manufacturing much. Firms pointed to a cost disadvantage: higher logistics and power costs, smaller plants and weaker supplier networks than in East Asia.
The pandemic, supply-chain disruptions and the "China plus one" strategy of global firms opened a window. In April 2020 the government notified the first PLI scheme for large-scale electronics manufacturing, followed by schemes for key pharmaceutical ingredients and medical devices. In November 2020 the Union Cabinet extended the approach to ten more sectors, and further schemes for drones and semiconductors-related activities followed. The underlying idea was to offset the cost disadvantage for a limited period, so that firms build scale and supplier ecosystems that become competitive on their own.
Create a free account to read 5 full pages a month, or upgrade for unlimited access. The definition above, the A–Z index and the pop-up definitions in lessons stay free.
