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Reviewed by May 19, 2023| Updated on
PLI Scheme, as the Production Linked Incentive Scheme is commonly abbreviated as, is an initiative started by the Government of India to not only encourage foreign companies to find workforce in the country and thereby generate employment, but also encourage domestic and local production to create micro jobs.
Like the name means, PLI scheme is an initiative that provides incentives to domestic industries to boost local production. When that happens, specifically tailored products emerge that satisfy a selected niche of target audience. Domestic businesses also help in cutting down import bills. As per the PLI scheme, the government encouraged domestic companies and establishments to set up or expand on manufacturing units to increase production, to which the government provides incentives on incremental sales. According to the PLI scheme update in November 2020, the scheme aimed to include ten more labour intensive sectors of production—examples include food processing, textiles etc. in addition to the already existing sectors like allied equipment for mobile phones and assembly, pharma and medical devices. The PLI scheme is essential in the country for many reasons. The prime necessity, as the Director of ICRIER said, is to neutralize the amount of imports and exports in the country in a non-discriminatory manner. This is possible when domestic industries are given more and due importance. Another reason is that India is primarily a labour intensive workforce owing to the population, and that the government could focus on capital influx for growth. But the capital intensive growth can generate returns only after a long time, a duration that foreign funding can afford. So instead, the government shifting its focus to boost short term, under a year result driven industries, can potentially balance the trade into and out of the country.