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India’s electronics production has witnessed a remarkable transformation over the past few years, thanks in large part to the Production-Linked Incentive (PLI) Scheme. The PLI Scheme was introduced by the Indian government in 2020 to boost domestic manufacturing, reduce import dependency, and enhance India’s position as a global manufacturing hub. This initiative has been particularly impactful in the electronics sector and has led to an impressive 180% increase in production from $37 billion in 2016 to $105 billion in 2023. One of the primary goals of the PLI Scheme is to reduce India’s dependency on electronic imports, particularly from countries like China. By fostering a robust domestic manufacturing ecosystem, the scheme aims to make India self-reliant in electronics production.
Genesis of the PLI Scheme
The PLI Scheme was introduced to incentivize companies to increase their manufacturing output within India by providing them financial rewards based on incremental sales. The scheme targets key sectors where India has the potential to become a global leader, including electronics, pharmaceuticals, automotive, and textiles. For the electronics sector, the scheme focuses on boosting the production of mobile phones, semiconductors, and other critical components.
The PLI Scheme offers financial incentives of 4 per cent to 6 per cent on incremental sales of goods manufactured in India. By providing financial rewards for increased production, the PLI Scheme encourages companies to invest in new technologies and innovative manufacturing processes, thus enhancing the overall competitiveness of the sector.
India’s electronics production surged from $37 billion in 2016 to $105 billion in 2023, marking a 180 per cent increase. This growth can be attributed to the increased investment and manufacturing capacity driven by the PLI Scheme. The scheme has attracted numerous global electronics giants, such as Apple, Samsung, and Foxconn, to set up manufacturing units in India. These investments have not only boosted production but also created thousands of jobs, contributing to economic growth. The electronics sector now constitutes 3 per cent of India’s GDP, up from a much smaller share in previous years. This reflects the sector’s growing importance to the national economy. Enhanced production capabilities have also led to a surge in electronics exports. India is now exporting a wide range of electronic products to various countries, further establishing its presence in the global market.
The success of the PLI Scheme in the electronics sector has contributed to the diversification of India’s economy. By reducing dependence on traditional industries like agriculture and services, India is building a more balanced and resilient economic structure. The growth in electronics manufacturing has created numerous job opportunities, both directly and indirectly. This has helped address unemployment issues and provided livelihoods to many skilled and unskilled workers.
The influx of foreign investment and collaboration with global tech leaders has facilitated technology transfer and skill development in India. This has positioned India as a hub for technological innovation and advanced manufacturing. India’s rapid rise in the electronics sector has enhanced its standing in the global economy. As the fastest-growing player in electronics production, India is now seen as a viable alternative to other manufacturing giants, furthering its strategic importance on the world stage. The continued success of the PLI Scheme is crucial for maintaining the momentum in India’s electronics industry.
Future plans include expanding the scheme to cover more products and components, increasing the financial incentives, and enhancing the ease of doing business in India. Additionally, the focus will be on building a comprehensive supply chain within the country, reducing reliance on imported components, and promoting research and development to stay ahead in the competitive global market. The PLI Scheme has been a game-changer for India’s electronics industry which has seen unprecedented growth and transformed India into a significant player on the global stage. By fostering domestic manufacturing, encouraging innovation, and attracting foreign investment, the scheme has set the foundation for a prosperous and self-reliant India.
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