In March 2020, the central government launched the Production Linked Incentive (PLI) schemes for three sectors – mobile manufacturing and electric components, pharmaceuticals (critical key starting materials/active pharmaceutical ingredients), and medical device manufacturing. The stated aim of the government in selecting these sectors was to reduce the country’s dependence on imports from China. In November 2020, the PLI schemes were expanded to cover 13 sectors with the aim of boosting India’s manufacturing capabilities and encouraging export-oriented production. (See Table 1 for details)
| Sector | Total incentive provision,
Rs. crore |
Incentive rate,
% |
| Automobiles & auto components | 25,938 | NA |
| Mobile & electronic components | 38,601 | 4 – 6 |
| Advanced battery | 18,100 | NA |
| Pharmaceuticals | 15,000 | 3 – 10 |
| Telecom & networking products | 12.195 | 4 – 7 |
| Food products | 10,900 | 4 – 10 |
| Textile products | 10,683 | NA |
| IT hardware | 7,350 | 1 4 |
| Active pharmaceutical ingredients | 6,940 | 5 – 20 |
| White goods | 6,238 | 4 – 6 |
| Specialty Steel | 6,322 | 4 – 12 |
| Solar PV modules | 4,500 | NA |
| Medical devices | 3,420 | 5 |
Each PLI scheme is applicable for a four to six-year duration period, depending on the sector. The incentive varies for different sectors, ranging from 4% to 6% for manufacturing of mobile and electronic components and up to 20% for active pharmaceutical ingredients. It is given on the incremental sales each year.
For arriving at the incremental sales in a year, the actual production in the year is compared with the previous year or the base year, whichever is higher. For example, if a company has sales of Rs 500 crore in 2020-21 and increases it up to Rs 1,250 crore of sales in 2021-22, Rs 750 crore will be considered as incremental sales. If the rate of incentive is, say, 4%, the incentive for the year will be Rs (4×750/100) = Rs 30 crore.
The government invites applications from companies whereby the company provides information about the planned investment, additional production, exports and employment generation for getting the approval.
The Union Budget of 2022 announced the provision of as much as Rs1.97 lakh crore for the PLI scheme!
The beneficiaries of the PLI scheme in most of the sectors are some of the biggest Indian and foreign monopolies.
One of the largest provisions of the PLI scheme of around Rs 26,000 crore is for the automobiles and auto component sectors. The beneficiaries include Maruti Suzuki (the largest car manufacturer of the country, having nearly 45% share of market, and a subsidiary of the Japanese multinational Suzuki), Hero MotoCorp (one of the largest manufacturers of two-wheelers in the world), Tata group (the largest producer of trucks in the country), Toyota Kirloskar (Toyota, Japanese multinational is the largest car manufacturer in the world), Bosch (this German multinational is one of the largest auto component producers in the world) and TVS group, among others.
The largest PLI provision of around Rs 40,000 crore is for mobile and electronics manufacturing. The biggest beneficiaries are foreign monopolies like Samsung (Korean multinational, the largest mobile seller in India and the world), Foxconn (Taiwanese multinational, the largest contract manufacturer of Apple mobiles and of other electronic goods in the world). Niti Aayog proudly declared that Foxconn India is the “first global company” approved under the scheme for mobile phones! It received an incentive of Rs 357.17 crore for manufacturing Apple phones between August 1, 2021 to March 31, 2022.
The beneficiaries of the PLI scheme for Specialty Steel are the steel monopolies of the country – Tata Steel, JSW Steel, Arcelor Mittal, Nippon Steel and SAIL. Similarly, the gainers of the PLI scheme for food products are the biggest monopolies in packaged food – ITC, Tata Consumer and Marico.
After handing over lakhs of crores of concessions particularly to big capitalists through the reduction of corporate taxes, the PLI schemes are yet another measure to benefit them at the cost of the people. Now capitalists are demanding an increase in the provision for the schemes and their extension to many more manufacturing sectors.
The PLI is nothing but a handout of public money for ensuring maximum profits for monopoly capitalists in the name of building ‘Atmnirbhar Bharat’. The profits of the biggest monopolies are guaranteed under the schemes, but fulfilment of stated objectives such as employment generation are not – they remain policy objectives. We have seen again and again that putting public money into the pockets of the monopoly capitalists is called “incentive”, while transfers to working people are called “freebies”.
The PLI scheme shows how the entire economy is oriented towards fulfilling capitalist greed. It is a system in which guaranteeing maximum capitalist profits is seen as the condition for achieving increased investment, production, exports, employment, etc. As long as this remains the orientation, the only thing that is guaranteed is that the super-rich will keep growing richer.