PLI Scheme


Finance Minister Nirmala Sitharaman hinted on Thursday and said the government is open to introducing a production-linked incentive (PLI) scheme for investments in the chemicals and petrochemicals sectors.

Urging industry to reduce its reliance on imports of chemicals that can be made in India, Ms. Sitharaman also emphasised the need to step up their adoption of newer technologies, with an eye on sustainability and circularity, for any benefits to accrue from potential partnerships with global players.


The Production-Linked Incentive (PLI) scheme is a government initiative aimed at promoting domestic manufacturing and boosting production in specific sectors.

It was introduced in India as part of the country's efforts to become a global manufacturing hub and increase its competitiveness in the international market.

The scheme provides financial incentives to eligible companies based on their incremental production and sales over a specific period.

Key features of the Production-Linked Incentive (PLI) scheme:


The primary objective of the PLI scheme is to encourage large-scale manufacturing in India and reduce dependence on imports.

By providing financial incentives, the government aims to attract investments and promote domestic production in key sectors.


Eligible Sectors:

The PLI scheme is sector-specific, meaning it targets specific industries or product categories. Different sectors may be included under the scheme based on their strategic importance and potential for growth.

For example, sectors like electronics, pharmaceuticals, textiles, automobiles, and telecommunications have been part of the PLI scheme.


Incentive Mechanism:

Companies participating in the PLI scheme can earn incentives based on their incremental sales and production volumes over a defined base year. The scheme sets specific targets for each participant to achieve over the incentive period.



The PLI scheme operates within a predetermined time frame, typically ranging from 3 to 5 years. During this period, eligible companies are required to meet their production and sales targets to qualify for the incentives.



Key features of the Production-Linked Incentive (PLI) scheme:

Selection Process:

Companies interested in participating in the PLI scheme must apply and undergo a selection process. The government evaluates the applications and selects eligible candidates based on predetermined criteria such as their manufacturing capabilities, investment plans, and production potential.


Budget Allocation:

The government allocates a specific budget for each sector under the PLI scheme.

The total incentive amount disbursed depends on the performance of the participating companies and the level of achievement of their targets.


Benefits for Companies:

The PLI scheme provides significant financial benefits to eligible companies. The incentives received can help offset production costs, improve competitiveness, and enhance profitability. It also encourages technology adoption and process improvement to meet the required targets.


Boost to Employment and Economy:

By promoting domestic manufacturing, the PLI scheme aims to create employment opportunities and contribute to economic growth. Increased production can lead to a higher demand for labor and raw materials, benefitting various sectors of the economy.


Government Support:

The PLI scheme is part of the Indian government's broader initiatives to strengthen the manufacturing sector and achieve the "Make in India" vision. It reflects the government's commitment to providing a conducive environment for businesses and attracting investments.



It's important to note that the specifics of the PLI scheme may vary from one sector to another and are subject to changes based on government policies and priorities.

The scheme has the potential to transform India's manufacturing landscape and make it a more attractive destination for investors and businesses.

Posted by on 28th Jul 2023