Production Linked Incentive Schemewere first implemented in India in March 2023, with the industries targeted being mobile production and electronics elements, pharmaceutical (critical key starting materials/active pharmaceutical ingredients), and medical device manufacturing. Since then, the PLI concept has grown to include schemes for a variety of industries in order to boost India’s manufacturing capabilities and encourage export-oriented production. The Production Linked Incentive Schemeaim to strengthen the local supply chain, introduce new downstream operations, and encourage investments in high-tech manufacturing.
Characteristics of the Production-Linked Incentive Scheme
PLIs are essentially financial inducements for businesses to increase output. They could take the form of tax breaks, tariff reductions on imports and exports, or even more straightforward land acquisition agreements. The PLI Scheme has the following features:
The scheme will run from 2023-24 to 2027-28. For five years, qualifying enterprises will receive a 4-6% incentive on increased sales of products made in India and covered by target segments, with the fiscal year 2019-20 serving as the Base Year for incentive calculations.
It is expected to attract more than 40,000 crores in investment.
There will be approximately 5,25,000 people employed, with 68,000 direct employees.
The scheme will be implemented with the assistance of a Nodal Agency acting as a Project Management Agency (PMA).
It will provide secretarial, administrative, and implementation support, as well as other functions as assigned by MeitY from time to time.
If India becomes Atma Nirbhar in the production of specialty steel, it will be able to climb the steel value chain and catch up to sophisticated steelmaking countries such as Korea and Japan.
PLI Scheme Eligibility Criteria
Companies registered in India and engaged in the manufacture of goods covered by the scheme’s target segments are eligible to apply for the PLI Scheme. Eligibility for the Scheme is subject to defined thresholds of Incremental Investment (covered under Target Segments) over the base year.
To be eligible for incentive disbursement for the year under consideration, an applicant must meet threshold criteria (i.e. incremental investment) of at least INR 10 crore (MSME) or INR 100 crore (Others) and a maximum of INR 1000 crore. To meet the Incremental Investment threshold criteria for any year, the cumulative value of investment made up to that year (including the year under consideration) over the Base Year (2019-20) shall be considered. Some industries have threshold criteria for incremental sales as well.
The applicant may operate an existing or new manufacturing unit in one or more countries.
Companies will be eligible for the incentive scheme if they incur additional expenditure on plant, machinery, equipment, research and development, and technology transfer for manufacture in the target segments.
Documents Are Required for the PLI Scheme
Individuals must submit the following documents during the online application process.
Certificate of incorporation
Association Memorandum (print copy)
Copies of the applicant’s CIN and Articles of Association
PAN information
Xerox GSTN Certificate
Company information
Details on top management’s experience and profile
Letter of Authorization
Interim annual account for the Consortium Agreement for Fiscal Years 2023-24 (IFA Annexure -5)
Board Resolutions of the IFA Annexure-4
Net worth certificate authorised by statutory auditor
The project’s construction plan and Pert chart
Permits, licences, and third-party approvals
Timetable for obtaining pending clearances
Annual reports for fiscal years 2017-18 to 2019-2020
Specifics on job creation (semi-skilled, unskilled and skilled)
Cover letter based on IFA Annexure-1 Power of Attorney based on IFA Annexure-2
Benefits information from IFA Annexure-6
Assurance of no pending defaults or litigation
Aside from the mentioned documents, an applicant must double-check the information entered into the electronic form. They must upload the relevant papers
PBG documentation
Follow the AML and FEMA guidelines.
Documents pertaining to the importation of capital goods
Failure to submit the required documents may result in the IREDA cancelling your application.
Production-Linked Incentive Scheme Application Process
Any company registered in India can make an application under the PLI Scheme. The applicant must go to the Production Linked Incentive Scheme (PLI) for IT Hardware’s official website.
The applicant must use CIN as a user ID to access the portal. After logging into the portal, fill out the application with all of your information.
An initial application, complete in all aspects, must be submitted to the Project Management Agency before the deadline. Following an initial review of the application, the Program Management Agency will issue a public acknowledgement. The acknowledgment does not imply approval under the PLI Scheme.
Project Management Agency will evaluate eligible applications on an ongoing basis and consider them for approval. Applications found eligible by the Project Management Agency under the Scheme will be recommended to the Minister-in-Charge for approval.
Claims for incentive release will be considered for disbursement after being reviewed and recommended by the Project Management Agency.
Incentives will be distributed to eligible applicants who meet the required thresholds and whose disbursement claims are approved.
1)What exactly is the PLI Scheme? Ans: The Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing, which was announced on April 1, 2023, will provide a financial incentive to boost domestic electronics manufacturing while also attracting large investments.
The Scheme will provide eligible companies with a 4% to 6% incentive on incremental sales (over the base year, i.e. 2019-20) of manufactured goods, including mobile phones and specified electronic components, for a period of five (5) years following the base year.
2)Who is considered an Applicant under the Scheme? Ans:An applicant for the purposes of the Scheme is a company registered in India that proposes to manufacture goods covered by Target Segments in India and applies for approval under the Scheme.
The applicant may use new or existing manufacturing facilities to produce goods covered by the Target Segments (i.e., mobile phones and specified electronic components). The aforementioned manufacturing can take place in one or more locations in India.
3)What is the deadline for submitting an application to the Scheme? Ans:According to Section 6.1 of the Scheme, the Application Window will be open for four months from the date of the Scheme’s notification. Since the notification was published on April 1, 2023, applications for the Scheme will be accepted until July 31, 2023.
4)What does it mean to have an incremental investment over the base year? Ans: To meet the reach targeted for Incremental Investment in any year, the cumulative value of investment made up to that year (including the year under consideration) over the Base Year, i.e. 2019-20, shall be taken into account.
In the case of mobile phones (with invoice values of INR 15,000 and above), for example, the applicant company must invest INR 250 crore or more by 31.03.2023 to meet the threshold for incremental investment in that year.
Similarly, to remain eligible under the scheme, a cumulative investment of INR 500 crore by 31.03.2022, INR 750 crore by 31.03.2023, and INR 1,000 crore by 31.03.2024 will be required.
