How Does The PLI Scheme Work?

How Does The PLI Scheme Work?

Known to avail a major boost to GOI’s goal of Aatma Nirbhar Bharat, let us understand what the PLI scheme is all about.

Crux of the Matter

What Is It?
Production Linked Incentive Scheme (PLI) was introduced by GOI in March 2020 and it aims at:

  • Making India a Manufacturing Hub.
  • Increasing Foreign Investments
  • Managing Trade Balance.
  • Lifting Standard of Living through expanding employment opportunities.

How Does It Work?
Incentives are based on investment & targeted increments in production.

For example, a firm manufactured 2,000 units in FY 19 -20. Now in 2020 -21, if production increases to 3,000 units., then the incentives applicable will be between 4% – 6% on the incremental 1,000 units produced.


  • Should be an Indian manufacturing company.
  • Companies having a registered production unit in India are eligible.
  • Firms can either set up a new unit or demand PLI for existing ones.
  • Applicable for 5 years – FY 19-20 to be considered a base year.

Sector Wise Allocation

  • Mobiles & Electronic components – ₹40,951 crore
  • Critical drugs & API’s – ₹6,940 crore
  • Medical devices – ₹7,420 crore
  • ACC battery – ₹18,100 crore
  • Electronic/technology products – ₹5,000 crore
  • Automobile & components – ₹57,042 crore
  • Pharmaceutical drugs – ₹15,000 crore
  • Telecom and networking products – ₹12,195 crore
  • Textile products – ₹10,683 crore
  • Food products – ₹10,900 crore
  • Solar PV – ₹4,500 crore
  • White goods (ACs and LEDs) – ₹6,238 crore
  • Specialty steel – ₹6,322 crore

The Hitches

December 2020
Apple Manufacturers, Samsung, Lava, Micromax asked the GOI to roll over the production targets under PLI because of their inability to meet the same.

October 2020
Even after 2 months of announcing the PLI scheme, the applicants were yet to receive the formal letters, striking uncertainty.

  • The inverse of a bonus payment, that is when base salaries shrink on poor performance, is called a malus.
  • The term clawback or claw back refers to any money or benefits that have been given out but are required to be returned (clawed back) due to special circumstances or events, such as the monies having been received as the result of a financial crime, or where there is a clawback provision in the executive compensation contract.
  • Performance-related pay is a salary or wages paid system based on positioning the individual, or team, on their pay band according to how well they perform. A fundamental criticism of performance-related pay is that the performance of a complex job as a whole is reduced to a simple, often single measure of performance.