Production Linked Incentive (PLI) Scheme

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What is Production Linked Incentive (PLI) Scheme?

Production Linked Incentive (PLI) Scheme

The Cabinet approved the Central Sector Scheme – “Production Linked Incentive (PLI) Scheme” with an outlay of Rs.10900 crore to support the creation of global food manufacturing champions commensurate with India’s natural resource endowment and to support Indian brands of food products in international markets.

  • In India, the food processing industry includes manufacturing businesses of various sizes, from micro to macro.
  • India has a competitive edge in resource endowment, a vast domestic market, and potential for value-added marketing products.
  • To realize the full potential of this industry, Indian businesses must enhance their competitive strength in terms of production scale, productivity, value addition, and connections to the global value chain compared to their international counterparts.
  • The Production Linked Incentive Scheme for the Food Processing Industry is based on the NITI Aayog’s “AatmaNirbhar Bharat Abhiyaan for Enhancing India’s Manufacturing Capabilities and Enhancing Exports”.

The Objective of the Production Linked Incentive (PLI) Scheme

  • To encourage the creation of strong Indian brands, support for food manufacturing companies with defined minimum sales, and to make the minimum stated investment to grow processing capacity and branding overseas.
  • Support the development of global food manufacturing champions; Strengthen chosen Indian food brands for worldwide exposure and acceptability in foreign markets.
  • Expand off-farm work possibilities.
  • Ensure remunerative farm produce pricing and higher income for farmers.

Features of Production Linked Incentive (PLI) Scheme

  • With a budget of Rs. 10900 crore, the Central Sector Scheme is the largest in the country.
  • The first component encourages the production of four key food product categories: ready-to-cook/ready-to-eat (RTC/ RTE) foods such as millets, processed fruits and vegetables, marine goods, and mozzarella cheese.
  • SME goods that are innovative or organic, such as free-range eggs, poultry meat, and egg products, are also covered.
  • The successful applicant will be obliged to invest in Plant & Machinery in the first two years as stated in their application (subject to the stipulated minimum).
  • Investments done in 2020-21 will also contribute toward the required investment.
  • For firms selected to make innovative/organic products, specified Minimum Sales and mandatory investment requirements will not apply.
  • The second component is help for branding and marketing in foreign markets to encourage the development of strong Indian brands.
  • The initiative provides grants to applicant businesses for in-store branding, shelf space rental, and marketing to promote Indian brands overseas.
  • From 2021-22 through 2026-27, the scheme will be implemented over six years.

Mechanisms for Administration and Implementation

  • The Empowered Group of Secretaries, led by the Cabinet Secretary, would oversee the plan at the national level.
  • The Inter-Ministerial Approval Committee (IMAC) would authorize the selection of applicants for coverage under the scheme and the sanction and release of cash as incentives.
  • The Ministry will create an Annual Action Plan that will encompass a variety of actions related to the scheme’s execution.
  • The initiative would include a third-party evaluation and mid-term review mechanism.

Strategy and goals for Implementation

  • The Production Linked Incentive (PLI) Scheme plan will be implemented across the country.
  • The plan will be carried out by a Project Management Agency (PMA).
  • The PMA would be in charge of, among other things, evaluates applications/proposals, verifies eligibility for assistance, and scrutinizes claims suitable for incentive payout.
  • The scheme’s reward would be paid for six years, ending in 2026-27. The incentive due for a particular year will be due the following year. So the plan will be in place for six years.
  • The program is “fund-limited,” which means that the cost will be limited to the allowable amount. Therefore, the maximum incentive granted to each beneficiary must be determined in advance at the time of the beneficiary’s approval. This limit should not be surpassed, regardless of success or performance.
  • By 2026-27, the scheme’s execution will increase processing capacity, resulting in processed food production of Rs 33,494 crore and the creation of approximately 2.5 lakh jobs.

FAQ’s – Production Linked Incentive (PLI) Scheme

What are the benefits of the PLI program?

For five years after the base year, the plan would provide qualifying firms with a 4% to 6% incentive on increased sales (over the base year) of items made in India and covered by target segments.

Is PLI superior to LIC?

Production Linked Incentive (PLI) Scheme provides a low premium rate as compared to LIC or any other private insurer. So this is the most significant benefit of buying endowment plans through PLI rather than LIC. In addition, the bonus rate provided by PLI is in the region of 7% or higher. On the other hand, LIC now provides a bonus rate of about 4% to 5%.

Who is eligible for the PLI program?

The Production Linked Incentive (PLI) Scheme is open to government departments and ministries employees, local governments, defense services, paramilitary forces, educational institutions, nationalized and commercial banks, and other designated organizations. Policyholders of Postal Life Insurance must be at least 19 years old but under 55 years old.