Do production-linked incentives for manufacturing work?
Recently, former RBI Governor Raghuram Rajan questioned the success of the PLI Scheme in boosting India's domestic manufacturing and exports
Do production-linked incentives for manufacturing work?
• Why in news?
Recently, former RBI Governor Raghuram Rajan questioned the success of the PLI Scheme in boosting India's domestic manufacturing and exports.
• About PLI
The Production-linked incentive scheme was launched by the centre in 2020. The scheme was conceived to scale up domestic manufacturing capability, accompanied by higher import substitution and employment generation.
The first sector which the PLI scheme had targeted was the Large Scale Electronics Manufacturing and by the end of the year (November 2020), 10 more sectors including food processing, telecom, electronics, textiles, speciality steel, automobiles and auto components, solar photovoltaic modules and white goods such as air conditioners and LEDs were also expanded under the PLI scheme.
•Objectives
The Government introduced this scheme to reduce India’s dependence on China and other foreign countries. It supports the labour-intensive sectors and aims to increase the employment ratio in India.
This scheme works to reduce down the import bills and boost up domestic production.
However, PLI Yojana invites foreign companies to set up their units in India and encourages domestic enterprises to expand their production units.