Context: The Union Cabinet recently approved the Production Linked Incentive (PLI) Scheme for the pharmaceuticals and IT hardware sectors.

• Objective: To enhance India's manufacturing capabilities by increasing investment and production in the sector and contributing to product diversification to high value goods.

Significance of the PLI scheme
To pharma sectors

• The scheme will be part of the umbrella scheme for the development of pharmaceutical industry.

The PLI scheme for pharmaceuticals, whose duration will be for nine years (from 2020-21 to 2028-29) will:

• Benefit domestic manufacturers
• Help create employment
• Contribute to the availability of a wider range of affordable medicines for consumers
• Promote the production of high-value products in the country
• Increase the value addition in export
• Help penetrate global value chains

The scheme is expected to bring in investment of Rs 15,000 crore in the pharmaceutical sector.

• India’s global contribution is 3.5 per cent but high-end patented drugs still come through imports. 

To IT hardware sectors

• An incentive will be given on net incremental sales of goods manufactured in India for a period of 4 years, will benefit 5 major global players and 10 domestic champions in the field of IT hardware.
• IT hardware sectors will include laptops, tablets, all-in-one-personal computers, and servers, mobile phones and its allied components, core and peripheral telecom equipment, and consumer electronics products.

The scheme will

• Generate employment for more than 1,80,000 (direct and indirect jobs) over four years.
• Provide impetus to domestic value addition for IT hardware which is expected to rise to 20-25% by 2025.
• 80 per cent laptops and tablets, sold in India are imported.

Background

• The government has approved the first set of five pharma projects in January 2021 under the PLI scheme for promoting domestic manufacture of bulk drugs and active pharmaceutical ingredients (APIs).

Additional Information
PLI Scheme

• It aims to give companies incentives on incremental sales from products manufactured in domestic units.
• It invites foreign companies to set units in India, however, it also aims to encourage local companies to set up or expand existing manufacturing units.