What is the primary objective of the PLI Scheme?

The main goal is to boost domestic manufacturing and exports in key sectors by offering financial incentives.

Which sectors are covered under the PLI Scheme?

The government scheme covers sectors like telecom, electronics, automobiles, pharmaceuticals, and textiles, among others.

How are the incentives under the PLI Scheme distributed?

Incentives are provided based on incremental sales and investment made by the company over five years.

What is the budget allocated for the PLI Scheme?

The scheme has a budget of ₹12,195 crores for telecom and networking products, with different allocations for other sectors.

Who is eligible to apply for the PLI Scheme?

Eligibility varies by sector, but generally, both MSMEs and large enterprises can apply based on investment thresholds and sales criteria.

Which sectors are covered under the PLI Scheme?

The government scheme covers sectors like telecom, electronics, automobiles, pharmaceuticals, and textiles, among others.

How are the incentives under the PLI Scheme distributed?

Incentives are provided based on incremental sales and investment made by the company over five years.

What is the budget allocated for the PLI Scheme?

The scheme has a budget of ₹12,195 crores for telecom and networking products, with different allocations for other sectors.

Who is eligible to apply for the PLI Scheme?

Eligibility varies by sector, but generally, both MSMEs and large enterprises can apply based on investment thresholds and sales criteria.

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PLI Scheme - Production-Linked Incentive For Boosting Manufacturing And Investment In India

Komal Bajpai

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Updated: 28-01-2025 at 7:01 AM

PLI Scheme - Production-Linked Incentive For Boosting Manufacturing And Investment In India

The Department of Telecommunications (DoT) started the Production Linked Incentive (PLI) Scheme in February 2021 to promote domestic manufacturing and exports. The govt scheme being applied aims at encouraging companies in telecom and networking product manufacturing by providing them cash incentives as per additional sales and investments made. The PLI scheme benefits with a budget of ₹12,195 crores and will have a positive impact on large enterprises and MSMEs as well.

Overview

The following table showcases the key highlights of the PLI Scheme:-

Topic	Key Highlights
Scheme Name	Production Linked Incentive (PLI) Scheme
Launched By	Department of Telecommunications (DoT), Government of India
Launch date	February 2021
Budget Allocation	₹12,195 crores
Target Sectors	Telecom & Networking Products, including 4G/5G equipment, IoT devices, and enterprise equipment
Products Covered	Core transmission equipment, 4G/5G wireless equipment, IoT devices, switches, routers, etc.
Incentives	Increase production, digital economy growth, strengthen automotive & textile industries, boost exports
Outcome	Boosts manufacturing, creates jobs, supports exports, and strengthens key industries.

What Is The PLI Scheme?

PLI scheme is AIDs to the domestic industries to stimulate production in the country. When that occurs, created products appear on the market that meet a specific segment of the target population. The domestic business also breaks even by reducing the bills of imports. As per the PLI scheme, the government motivated establishments within the country to establish or expand manufactured units for increased production to which the government gives a bonus on additional sales.

Purpose

The Production Linked Incentive which is the PLI Scheme’s full form mainly targets telecom and networking equipment manufacturing, domestic investment, and export in India.

The incentive scheme has been sanctioned down to ₹12,195 crores spread over five years with ₹2500 crores being especially set aside for MSMEs.
The aim is to spur additional bonafide incremental sales of products manufactured in India and investments made in this sector. The telecom and networking products are critically important for increasing the level of communication in India.

Products Covered Under the PLI Scheme

Before heading into the PLI scheme details, let us first understand the number of products which are covered by the PLI Scheme:-

The four major product categories are:

Core Transmission Equipment
4G/5G and Wireless Equipment
Access & CPE, IoT Devices
Enterprise Equipment: Switch and Router

Issues with the PLI Scheme

The Production Linked Incentive (PLI) scheme in India has encountered several challenges, such as that most of the guidelines set out for the implementation of the reforms are not clear.

However, the major issues faced by the PLI Scheme are as follows:

Restrict employment generation in sectors such as leather and garments, handicrafts, and jewellery.
It concerns the application gap between submission and approval because of various reasons that will be discussed below.
Some inefficient schemes are without any disbursement.
Increasing regulatory concerns create challenges.
Constraints resulting from financial and budgetary policies and allocations have limited the effectiveness of this scheme.
Out of all these challenges, the major problem that has been known to slow down projects has to do with environmental clearance issues.
Challenges of Visa especially when dealing with Chinese components that are manufactured in India.

Expansion of Production Linked Incentive Scheme

On 11 November 2020, the Union Cabinet headed by Prime Minister Narendra Modi gave its approval to the committee for broadening of Production Linked Incentive (PLI) scheme across ten sectors for augmenting India’s manufacturing potential in addition to exports.

The Production Linked Incentive, PLI scheme in India has been expanded to cover 10 new sectors, with a total financial outlay over five years. Below is a concise table summarising the sectors, the implementing ministry/department, and the approved financial allocation.

Sectors	Implementing Ministry/Department	Approved Financial Outlay (₹ Crores)
Advanced Chemistry Cell (ACC) Battery	NITI Aayog and Department of Heavy Industries	18,100
Electronic/Technology Products	Ministry of Electronics and Information Technology	5,000
Automobiles & Auto Components	Department of Heavy Industries	57,042
Pharmaceuticals Drugs	Department of Pharmaceuticals	15,000
Telecom & Networking Products	Department of Telecom	12,195
Textile Products (MMF segment and technical textiles)	Ministry of Textiles	10,683
Food Products	Ministry of Food Processing Industries	10,900
High-Efficiency Solar PV Modules	Ministry of New and Renewable Energy	4,500
White Goods (ACs & LED)	Department for Promotion of Industry and Internal Trade (DPIIT)	6,238
Speciality Steel	Ministry of Steel	6,322

Goals

Make India part of the Global Value Chain.

The government intends to deepen India’s position in the global value chain and exports.

Boost Digital Economy.

India has set a goal for the country’s digital economy to reach USD 1 trillion by 2025, for which the electronics requirements are expected to grow owing to aspects such as Smart City and Digital India.

Strengthen the Automotive Industry.

The PLI scheme will herald increased competitiveness in the Indian automotive sector and spur globalisation.

Enhance the Textile Industry.

Being one of the largest consumers of textile products globally the scheme has intentions of focusing mostly on the MMF and Technical Textiles.

Support Steel Production.

The PLI scheme will help India which is the second-largest steel producer to have more export opportunities.

Promote Other Sectors.

The PLI scheme implies other sectors which include telecommunication, solar panels, pharmaceuticals, and white goods among others thus enhancing economic growth to lead to the manufacturing of India.

The PLI Scheme For Large-Scale Electronics Manufacturing

The first segment of the launched PLI scheme in India was aimed at mass electronics manufacturing, targeting handset manufacturing.

Total Investment: The proposed investment for this phase was ₹40,995 crores.
Target: The incentive scheme is designed to increase the production of mobile phones in the country and the establishment of ATMP centres.
Employment Generation: It is anticipated to generate employment for more than 2 lakh of the electronics manufacturing industry in five years.
Domestic Production Growth: Mobile manufacturing escalated from ₹18,900 crores in Ref 2014-15 to ₹1,70,000 crores in Ref 2018-19. The enhancement of domestic production has been anticipated by the PLI scheme.

The table below outlines the financial outlay for key sectors under the first phase of the Production Linked Incentive (PLI) Scheme:

Sectors	Implementing Ministry/Department	Financial Outlay (₹ Crores)
Mobile Manufacturing and Specified Electronic Components	Ministry of Electronics and IT (MEITY)	40,951
Critical Key Starting Materials/Drug Intermediaries and Active Pharmaceutical Ingredients	Department of Pharmaceuticals	6,940
Manufacturing of Medical Devices	Department of Pharmaceuticals	3,420

PLI Scheme For Pharmaceuticals

The PLI scheme under pharmaceuticals was announced for Five years starting from FY 20-21 to FY 2028-29. Let us understand this in detail.

Projected Incremental Sales and Exports: A total potential of estimated incremental sales of ₹2,94,000 crores and exports of ₹1,96,000 crores during six years from 2022-23 to 2027-28.
Employment Opportunities: The total employment impact from the particular sector growth that the scheme will offer is expected to be 1,00,000 direct and indirect employment.
Scheme Duration: This timeline covers receiving applications in the FY 2020-21, incubation period in the FY 2021-22, incentivization period for six years and disbursement of incentives for the FY 2027-28 in the FY 2028-29.

Benefits

The below table and the mentioned points showcase the major Benefits of the Production Linked Incentive (PLI) Scheme:

Incentive Outlay and Eligibility Thresholds

The PLI scheme offers different incentives based on the investment threshold for MSMEs and non-MSMEs. Below are the details:

A) For MSMEs (Minimum Threshold Investment: ₹10 Crores)

Year	Proposed Incentive Rate	Cumulative Investment	Minimum Eligible Incremental Net Sales	Maximum Eligible Incremental Net Sales
1st Year	7%	≥ 20% of X	3 × (20% of X)	20 × (20% of X)
2nd Year	7%	≥ 40% of X	3 × (40% of X)	20 × (40% of X)
3rd Year	6%	≥ 70% of X	3 × (70% of X)	20 × (70% of X)
4th Year	5%	≥ 100% of X (fully committed investment)	3 × X	20 × X
5th Year	4%	≥ 100% of X	3 × X	20 × X

B) For Non-MSMEs (Minimum Threshold Investment: ₹100 Crores)

Year	Proposed Incentive Rate	Cumulative Investment	Minimum Eligible Incremental Net Sales	Maximum Eligible Incremental Net Sales
1st Year	6%	≥ 20% of X	3 × (20% of X)	20 × (20% of X)
2nd Year	6%	≥ 40% of X	3 × (40% of X)	20 × (40% of X)
3rd Year	5%	≥ 70% of X	3 × (70% of X)	20 × (70% of X)
4th Year	5%	≥ 100% of X (fully committed investment)	3 × X	20 × X
5th Year	4%	≥ 100% of X	3 × X	20 × X

Additional Incentive:

Products qualified under Design-led Manufacturing will receive an extra 1% incentive over the base incentive each year.

Note:

X = Total committed investment by the company/entity over four years.
MSMEs are Micro, Small, and Medium Enterprises as defined by the Government of India.
Incremental net sales are calculated as per Clause 2.20 of the Scheme Guidelines.

Eligibility Criteria

The PLI Scheme details are available for specific types of companies and are based on the company’s global manufacturing revenue.

Companies	Criteria
Global Companies	The global manufacturing revenue required for each global player was set at ₹10,000 crores in the base year.
Domestic Companies	Must have manufacturing revenue of more than ₹250 crores position in its base year with a global operation.
MSMEs	The minimum stipulation set by the company is to have a Global Manufacturing Revenue of at least 10 crore of the base year.

Additional Requirements:

The company needs to produce goods in target segments in the scheme in India.
FDI has to assess the FDI policy that was developed in the year 2020.

Application Procedures

Eligible companies must submit an online application through the official government portal to apply for the PLI (Production Linked Incentive) Scheme.

The below-mentioned process outlines the details of the registration process and application submission for the PLI Scheme:-

Registration:

Get to the scheme’s implementation portal and apply by completing the economical application form.
Once your answers have been submitted, check the link received on the Nodal Officer’s email to confirm your mobile number.

Application Submission:

The PMA will study the application and send a confirmation within two working days at most.
The applicants have to deposit a non-refundable application amount of ₹ 1,00,000/- through RTGS/NEFT.

Review Process:

Upon receipt of the application, the PMA will conduct an initial assessment within 15 working days at most.
If there be any inadequacies in the application the same will need to be communicated to the applicant and such an applicant will have the opportunity of fifteen working days to correct the same.

Documents Required

To apply for the PLI (Production Linked Incentive) Scheme, applicants need a company registration certificate, tax-related documents (GST, PAN), bank account details, proof of operational status, and financial statements for eligibility.

Applicants need to upload the following key documents:

PAN Card.
Authorised Letter for Nodal Officer.
Certificate of Incorporation.

What Happens After Approval?

Once the application is approved, companies can claim incentives for every year during which they make new investments and incremental sales for a five-year duration of the scheme.

The incentives will be distributed based on the company’s qualify for that particular year it will be on an annual basis.

Conclusion

The Production Linked Incentive Scheme for telecom & networking product manufacturing is an exciting prospect for companies to start reaping benefits through the financial incentives while being aligned with the push to provide a boost to the domestic manufacturing industry. It also importantly outlines eligibility criteria and application process so that the global company, MSME, or the domestic manufacturer could maximise the benefits accruing from the scheme. Go online and head to the official portal to open your registration account to benefit from this.

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