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Production-linked incentive scheme

Topics Covered: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

Production-linked incentive scheme:


The Union Cabinet has approved the production-linked incentive scheme for the telecom sector with an outlay of ₹12,195 crore over five years.

  • The implementation scheme will start from April 1, 2021.


  • The scheme is expected to encourage production of equipment worth Rs 2.44 lakh crore and create direct and indirect employment for about 40,000 people.
  • The scheme is expected to bring investment of over Rs 3,000 crore and generate significant direct and indirect employment and taxes both.

About the PLI scheme:

  1. The scheme aims to make India a global hub for manufacturing telecom equipment.
  2. Its eligibility criteria include achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods.
  3. The incentive structure ranges between 4% and 7% for different categories and years. Financial year 2019-20 will be treated as the base year for computation of cumulative incremental sales of manufactured goods net of taxes.
  4. Minimum investment threshold for MSMEs has been kept at Rs 10 crore and for others at Rs 100 crore.
  5. Once qualified, the investor will be incentivised up to 20 times of minimum investment threshold enabling them to utilise their unused capacity.


Prelims Link:

  1. Production linked incentive scheme- when was it announced?
  2. Incentives under the scheme is available to?
  3. What kind of investments will be considered?
  4. Duration of the scheme.
  5. Who will implement it?

Mains Link:

What is the production linked incentive scheme for electronics manufacturers? Discuss.

Sources: PIB.