The Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing is a government initiative designed to boost domestic manufacturing and attract investments in the electronics sector. This piece provides an overview of the scheme’s guidelines, recent amendments, and the incentives it offers to manufacturers.
Background of the PLI Scheme
The Ministry of Electronics and Information Technology (MeitY) notified the PLI scheme on April 1, 2020, to encourage large-scale electronics manufacturing in India. The scheme aims to create a robust ecosystem for electronics production, reduce reliance on imports, and boost India’s presence in the global electronics market. The first round of the scheme was open for applications until July 31, 2020.
Key Objectives of the PLI Scheme
The primary objectives of the PLI scheme are to:
-
Promote large-scale electronics manufacturing in India.
-
Attract investments in the electronics sector.
-
Reduce reliance on imports of electronic goods.
-
Boost India’s position in the global electronics market.
-
Generate employment opportunities in the electronics manufacturing sector.
Target Segments
The scheme focuses on two target segments:
-
Mobile Phones: Mobile phones with an invoice value of ₹15,000 and above.
-
Specified Electronic Components: SMT components, discrete semiconductor devices, passive components, printed circuit boards (PCBs), sensors, transducers, actuators, and other components.
Eligibility Criteria
To be eligible under the PLI scheme, applicants must:
-
Be a company registered in India.
-
Manufacture goods covered under the target segments.
-
Meet specific thresholds for incremental investment and sales of manufactured goods.
Amendments to the Scheme
Several amendments have been made to the scheme guidelines:
-
Net Sales Turnover: The definition of Net Sales Turnover has been amended to mean Gross Sales net of credit notes, discounts, taxes, and expenses pertaining to advertisement, sales promotion, and brand royalty.
-
Incremental Sales of Manufactured Goods: The definition of Incremental Sales has been amended to mean Net Sales of Manufactured Goods over a given period minus the Net Sales of Manufactured Goods in the Base Year over the corresponding period.
-
Baseline for Approved Applicants: The baseline for sales of manufactured goods includes sales in the target segment in India, as well as any entity (group company) whose manufacturing revenue in India has been considered for determining qualification.
-
Competent Authority: The Competent Authority is defined as per delegation of powers for appraisal and approval of Public Funded Schemes and Projects.
Incentives Under the Scheme
The scheme provides financial incentives based on incremental sales of manufactured goods. The incentive rates vary based on the target segment and the year of production. For Mobile Phones, the incentive rates are:
-
Year 1: 6%
-
Year 2: 4%
-
Year 3: 5%
-
Year 4: 5%
-
Year 5: 4%
For Specified Electronic Components, the incentive rates are:
-
Year 1: 5%
-
Year 2: 4%
-
Year 3: 4%
-
Year 4: 3%
Eligibility Thresholds for Incentives
To be eligible for incentives, applicants must meet specific thresholds for incremental investment and incremental sales. These thresholds vary based on the target segment and the year.
Investment for Determining Eligibility
-
Investment is defined as expenditure on plant, machinery, equipment, and associated utilities.
-
Expenditure on research and development (R&D) and transfer of technology is also considered.
-
Expenditure on land and building is not included.
-
Investment must be made on or after April 1, 2020 (or April 1, 2021 for the second round).
Application Process
-
Applications are submitted through an online portal to MeitY/Project Management Agency (PMA).
-
A non-refundable application fee of ₹1,00,000 is payable.
-
The application window is open for a specific period, which may be extended.
-
The PMA conducts a preliminary examination of the applications.
-
The Empowered Committee (EC) approves applications based on the PMA’s recommendations.
Disbursement of Incentives
-
Applicants must submit claims for disbursement of incentives to the PMA.
-
The PMA verifies eligibility and assesses the incentive amount.
-
The EC approves the claims for disbursement.
-
The payment of incentives is made through Direct Benefit Transfer (DBT) or other mechanisms.
-
Claims can be submitted on a quarterly, half-yearly, or annual basis.
Monitoring and Evaluation
-
The scheme is monitored by the Ministry of MSME.
-
The Empowered Committee (EC) reviews the scheme’s progress and makes necessary adjustments.
-
The PMA is responsible for monitoring the implementation and disbursement of incentives.
Conclusion
The Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing is a crucial initiative to boost domestic manufacturing and attract investments in the electronics sector. By offering financial incentives and streamlining the application process, the scheme aims to create a robust and competitive electronics manufacturing ecosystem in India. The amendments to the guidelines reflect the government’s commitment to ensuring the scheme’s effectiveness and relevance.