Economics • Indian EconomyHard
Examine the economic objectives of the 'Production Linked Incentive' (PLI) scheme introduced across key manufacturing sectors in India. What is its primary structural mechanism?
A. Providing direct tariff protection and import quotas against foreign competitors
B. Offering financial incentives calculated as a percentage of incremental sales from products manufactured domestically✓ Correct Answer
C. Granting tax holidays on corporate profits for fifty years without performance conditions
D. Subsidizing land acquisition costs and electricity tariffs for all registered corporate entities
💡 Solution & Explanation
The Production Linked Incentive scheme provides financial incentives to companies based on incremental sales of products manufactured in domestic production units, aiming to boost manufacturing competitiveness, attract global investments, and integrate India into global supply chains. By tying financial rewards directly to output and sales growth rather than input subsidies, the scheme incentivizes operational efficiency and scale. It targets priority sectors such as electronics manufacturing, pharmaceuticals, and automobiles. A related trade policy measure is the Remission of Duties and Taxes on Exported Products scheme.
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