Published On : Thu, Apr 22nd, 2021

Production Linked Incentive Scheme should be made more liberalised – CA Julfesh Shah

Production Linked Incentive Scheme (PLI) should be made more liberalised so that the MSME Sector can avail its maximum benefits and can make incremental contribution by way of incremental sales, exports, employment etc. said CA Julfesh Shah while speaking on the newly introduced PLI scheme by the Central Government to boost Aatmanirbhar Abhiyan. Production-Linked Incentive or PLI scheme is a scheme that aims to give companies incentives on incremental sales (over FY 2019-20) from products manufactured in domestic units.

The scheme invites foreign companies to set up units in India, however, it also aims to encourage local companies to set up or expand existing manufacturing units and also to generate more employment and cut down the country’s reliance on imports from other countries said CA Julfesh Shah. He further said that the purpose of widening the PLI Scheme to cover more products was to protect identified product areas, introduce non-tariff measures that make imports more expensive, acknowledge the relevance of exports in overall growth strategy but focus more on the domestic market & promote manufacturing at home by offering production incentives and encourage investments both from within and outside.

Elaborating on the subject, CA Julfesh Shah said that initially only 3 sectors were identified for this scheme viz. Electronics including mobile phones and allied equipment manufacturing, pharmaceutical ingredients and medical devices. From Nov 2020 onwards, in addition to the above sectors the scheme has expanded to ten other sectors namely food processing, Electronic/Technology Products, Pharmaceuticals drugs, Advance Chemistry Cell (ACC) Battery, telecom, textiles, specialty steel, automobiles and auto components, solar photo-voltaic modules and white goods such as air conditioners and LEDs. Companies that are registered in India and are involved in the manufacturing of goods covered under the target segments of the scheme can apply under the PLI Scheme.

Eligibility under the Scheme shall be subject to thresholds of Incremental Investment (covered under Target Segments) over the base year as defined. An applicant must meet threshold criteria (i.e. incremental investment) that is a minimum of INR 10 crores (MSME) or INR 100 crores (Others) and a maximum of INR 1000 crores to be eligible for disbursement of incentive for the year under consideration. To meet the threshold criteria of Incremental Investment for any year, the cumulative value of investment done till such year (including the year under consideration) over the Base Year (2019-20) shall be considered.

Some sectors also have threshold criteria for incremental sales. Any additional expenditure incurred by companies on plant, machinery, equipment, research and development and transfer of technology for manufacture in the target segments will be eligible for the incentive scheme. The applicant can operate existing or new manufacturing unit at one or more locations in the country. The scheme shall grant an incentive of 4% to 6% on incremental sales over base year i.e. 2019-20 of goods manufactured in India and covered under target segments to eligible companies, for a period of five years subsequent to the base year. The number of applications allowed per applicant for support under the scheme shall be restricted to one, CA Shah clarified.

Project Management Agency (PMA) shall receive the application through an Online Portal for prima facie examination and issue acknowledgement within 15 days post completion of examination. All the applications shall be finalized within 60 days from the date of issuance of acknowledgement of receipt of the application and if found eligible,approval letter will be sent to the applicant.Due to the pandemic,not many companies are able to take it’s benefits & it should be suitably modified & extended, concluded Shah.