Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

[pib] Production Linked Incentive (PLI) Scheme 1.1

Schemes | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth
Note4Students

From UPSC perspective, the following things are important :

Prelims level: PLI Scheme 1.1

Why in the News?

Union Minister for Steel and Heavy Industries has inaugurated the second round of the Production Linked Incentive (PLI) Scheme for Specialty Steel, termed PLI Scheme 1.1.

About the PLI Scheme 1.1

  • It is built upon the earlier round of the PLI scheme to enhance domestic manufacturing of high-value steel, reduce imports, and boost India’s global steel market position.
  • 5 specialty steel categories are considered:
    1. Coated/Plated Steel Products for appliances, construction, and automotive sectors.
    2. High Strength/Wear-Resistant Steel for infrastructure, mining, and heavy machinery.
    3. Specialty Rails for railways and metros.
    4. Alloy Steel Products and Steel Wires for industrial uses.
    5. Electrical Steel (CRGO and others): Cold-Rolled Grain-Oriented Steel, essential for power transformers and electrical applications.
  • It covers production from FY 2025-26 to FY 2029-30 and operates within the original budget of ₹6,322 crore.
  • Changes introduced in PLI Scheme 1.1:
    • Investment and capacity thresholds reduced:
      • For CRGO Steel: Investment threshold lowered to ₹3,000 crore; capacity threshold to 50,000 tonnes.
      • Encourages CRGO production as a strategic priority under Atmanirbharta.
    • Carry-forward provision: Excess production in one year can offset shortfalls in another, ensuring optimal incentive distribution.
    • Companies investing in capacity augmentation can participate; thresholds reduced to 50% of original requirements.
    • Simplified guidelines: Revised to improve accessibility and encourage industry participation.

Bakc2Basics: PLI Schemes 1.0 and 2.0

PLI Scheme 1.0

  • Launched in March 2020, it aimed to boost domestic manufacturing, reduce imports, and create jobs in key sectors.
  • Initially focused on three industries (mobile manufacturing, electrical components, and medical devices) but later expanded to 14 sectors, including electronics, pharmaceuticals, and textiles.
  • Provided 1%–4% incentives on incremental sales over the base year, with a ₹7,350 crore outlay for IT hardware.
  • Had an estimated investment target of ₹2,500 crore (IT hardware) but did not specify details on job creation.
  • Served as a cornerstone for Atmanirbhar Bharat, promoting self-reliance and innovation in India’s manufacturing ecosystem.

PLI Scheme 2.0

  • Launched in May 2023, it specifically focuses on IT hardware (laptops, tablets, servers, PCs) to enhance global competitiveness.
  • Comes with a higher budget of ₹17,000 crore (for IT hardware) over a 6-year duration.
  • Incentivizes local manufacturing with ~5% incentives on incremental sales, alongside additional benefits for components like memory modules and SSDs.
  • Targets ₹2,430 crore in investment, ₹3.35 lakh crore in production, and $12–17 billion in exports by 2025–26.
  • Seeks to create 75,000 direct jobs and up to 2 lakh indirect jobs, offering different incentive caps for global, hybrid, and domestic companies.

 

PYQ:

[2023] Consider, the following statements:

Statement-I: India accounts for 3.2% of global export of goods.

Statement-II: Many local companies and some foreign companies operating in India have taken advantage of India’s ‘Production-linked Incentive’ scheme.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I

(c) Statement-I is correct but Statement-II is incorrect

(d) Statement-I is incorrect but Statement-II is correct

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