Umbrella PLI scheme on anvil to spur domestic manufacturing

New Delhi: The government proposes to introduce an umbrella production-linked incentive (PLI) scheme with an allocation of about Rs 40,000 crore to replace the existing Merchandise Exports India Scheme (MEIS) scheme introduced in April 2015 to promote manufacturing and exports of specified goods from India.

Government sources said that a high-level meeting chaired by the Cabinet Secretary took place on Wednesday to discuss measures to promote domestic manufacturing, undertake import substitution and thrash out details of a universally applicable production-linked incentive (PLI) and phased manufacturing programme (PMP) scheme.

Unlike the existing PLI schemes introduced by the Ministry of Electronics and IT for mobile phone manufacturing and the Ministry of Chemicals and Fertilisers for promoting bulk drug and medical device parks, the one being proposed now would be an umbrella scheme that could be adopted by any ministry that comes up with viable plan on import substitution and promotion of domestic manufacturing.

The government proposes to fund the new scheme with an initial allocation of Rs 40,000 crore in the current year with allocation rising by about 10 per cent every year depending on the need. Like the existing PLI schemes, the umbrella scheme would also be operational for a period of five years. The allocation from the scheme would from what was required under MEIS.

Sources said that the government proposes to expand the scope of PLI to cover nine or 10 more sectors including air conditioners and TV sets, leather, chemicals, furniture, tyres, toys, solar cells, auto components, capital goods, textile and food processing. Apart from PLI, a phased manufacturing programme (PMP) will also be launched especially in areas of import substitution and where some domestic manufacturing capability exists. This would cover some electronics items, surgical instruments, sports equipment, optical and photographic instruments, and power equipment.

Under PMP, the government will look at providing duty protection to the sector for some time so that manufacturing could be established.