Through a cornerstone of Atmanirbhar Bharat, Production Linked Incentive (PLI) scheme is not without its own challenges. Comment.

Production Linked Incentive provides for incentives for produce created mainly in the units in manufacturing sector. PLI as cornerstone of Atmanirbhar Bharat is: 1) Promotes growth of manufacturing sector (Increasing industries share of GDP from 26%) 2) Increasing investment (domestic, FDI and FPI) 3) Government support for exports by industries 4) Decreases heavy capital requirement and sustainable debt of industries (MSME – 580 billion credit gap) 5) Growth of MSMEs => Inclusive growth and formalization of economy.

(12L-SCs and 4L-STs in MSMEs) Challenges of PLI: 1) Non-inclusion of sectors (Only 13 sectors are supported) 2) Macro-level freebies (Can lead to crony capitalism) 3) Monopolistic tendencies of industries in PLI 4) High informal economy (80% of MSMEs) 5) Benefits accrued to foreign manufacturers => Low benefit for domestic manufacturers 6) Changing policies of government work investment (Apple, Foxconn, Tesla's initial interest and exit) Improving PLI: 1) Inclusivity of sectors with maximal benefits for labour (Textiles, Pharmaceuticals)