India: Production Linked Incentive Scheme

a. Overview

To boost manufacturing activities in India, the Government has announced the Production Linked Incentive (“PLI”) scheme and earmarked around USD 27 Billion covering 13 sectors. An incentive to the extent of 4 to 6 percent of incremental sales would come to the selected applicants.  The PLI Scheme not only aims to boost India’s manufacturing capacity but also aims to garner a larger share in global value supply chains.

b. Selected sectors

Selected sectors range from textiles to telecoms, covering both critical and sunrise segments. The following table captures the status of application deadlines and issuance of guidelines for the relevant sectors:
 

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c. Eligibility Criteria and Application Process

The PLI Scheme is devised to incentivise sales and branding/marketing expenditure depending upon its scope. The relevant  ministries roll out the scheme to be executed by the relevant ‘Project Management Agency’ (PMA). Each scheme provides for eligibility criteria covering inter alia minimum investment and employment generation.

The application process is primarily online and the minimum investment criteria along with eligibility requirements are announced in guidelines for each sector. The applications are exhaustive, requiring exhaustive data about past performance and sales projections for the next 5-6 years. Companies applying under the scheme would need to provide the allotment of total investment towards components like, plant and machinery, infrastructure development in addition to prescribing a tentative spread for the quantum of investment to be deployed during the period of the scheme applied for. 

d. The opportunity

The PLI scheme is expected to boost India’s production by USD 520 Billion over a period of 5 years. Any foreign investor making a case for generating employment and increasing manufacturing in India will be able to avail of these benefits, subject to the fulfilment criteria.

By Deepak Kumar, Pranay Sahay and Kalp Saraiya
Khaitan & Co
Mumbai, India

If you have any queries, please reach out to our UIA Team at Khaitan & Co: uia@khaitanco.com.