Q. 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?

  • Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
  • Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
  • Statement-I is correct but Statement-II is incorrect
  • Statement-I is incorrect but Statement-II is correct

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

Notes
  • As per the latest data available (Economic Survey 2022-23) India’s accounts for 1.8% of Global export of goods and 4% of global export of services.
  • Production Linked Incentive (PLI) scheme is a form of Performance-linked incentive given to companies based on their incremental sales from products manufactured in domestic units. It is aimed at boosting the manufacturing sector and to reduce imports of India.
  • PLI schemes can be availed by both domestic as well as foreign companies operating in India, thus it is true that many domestic and foreign companies operating in India have taken advantage of PLI schemes.
Production Linked Incentive Scheme (PLI)
  • The PLI scheme was conceived to scale up domestic manufacturing capability, accompanied by higher import substitution and employment generation.
  • Launched in March 2020, the scheme initially targeted three industries:
    • Mobile and allied Component Manufacturing
    • Electrical Component Manufacturing and
    • Medical Devices.
  • Later, it was extended to 14 sectors.
    • The 14 sectors are: mobile manufacturing, manufacturing of medical devices, automobiles and auto components, pharmaceuticals, drugs, specialty steel, telecom & networking products, electronic products, white goods (ACs and LEDs), food products, textile products, solar PV modules, advanced chemistry cell (ACC) battery, and drones and drone components.
  • In the PLI scheme, Domestic and Foreign companies receive financial rewards for manufacturing in India, based on a percentage of their revenue over up to five years.
  • Incentives Under the Scheme:
    • The incentives given, are calculated on the basis of incremental sales.
      • In some sectors such as advanced chemistry cell batteries, textile products and the drone industry, the incentive to be given will be calculated on the basis of sales, performance and local value addition done over the period of five years.
    • The emphasis on R&D investment will also help the industry keep up with global trends and remain competitive in the international market.