Economics • Indian EconomyHard
Analyze the objectives of the 'Production Linked Incentive' (PLI) scheme implemented across key manufacturing sectors in India. What is its core economic mechanism?
A. Providing direct cash subsidies to companies based on their total domestic employment generation regardless of output
B. Offering financial incentives calculated as a percentage of incremental sales from products manufactured domestically to boost manufacturing competitiveness✓ Correct Answer
C. Imposing high tariff barriers on imported raw materials to force domestic sourcing
D. Waiving corporate income tax liabilities permanently for all foreign multinational corporations
💡 Solution & Explanation
The Production Linked Incentive scheme provides financial incentives to domestic and international companies based on incremental sales of manufactured goods in specified key sectors over a base year, aiming to boost domestic manufacturing capabilities, attract investments, and enhance export competitiveness. Alternative options refer to employment-only subsidies, tariff walls, or permanent tax waivers. It is a cornerstone of industrial policy aimed at integrating India into global value chains.
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