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Revival of domestic production with PLI Scheme

Published: 14th Mar, 2024

Context

India is set to start manufacturing the common antibiotic Penicillin G later this year, three decades after the country’s last plant shut down. This revival is one of the successes of the Production Linked Incentive scheme launched during the pandemic to promote domestic manufacturing — the scheme gives incentives to companies on incremental sales.

1: Dimension-The issue of market flooding

  • Penicillin G is the active pharmaceutical ingredient (API) used in manufacturing several common
  • Penicillin G, just like many other APIs that India manufactured, was phased out of production because of subsidy-driven cheaper Chinese products flooding the market.

2: Dimension- Role of PLI Scheme for the economy

  • Production Linked Incentive scheme (PLI) has become a crucial part of the vision of making India a $ 5 trillion economy. In the post-pandemic scenario, PLI is proving to be a huge catalyst in creating ‘AatmaNirbhar Bharat’.
  • The scheme currently targets 14 sectors of strategic and economic importance for India’s economic growth.
  • The 14 sectors are: (i) Mobile Manufacturing and Specified Electronic Components, (ii) Critical Key Starting Materials/Drug Intermediaries & Active Pharmaceutical Ingredients, (iii) Manufacturing of Medical Devices (iv) Automobiles and Auto Components, (v) Pharmaceuticals Drugs, (vi) Specialty Steel, (vii) Telecom & Networking Products, (viii) Electronic/Technology Products, (ix) White Goods (ACs and LEDs), (x) Food Products, (xi) Textile Products: MMF segment and technical textiles, (xii) High efficiency solar PV modules, (xiii) Advanced Chemistry Cell (ACC) Battery, and (xiv) Drones and Drone Components.
  • The purpose of the PLI Schemes is to
    • attract investments in key sectors and cutting-edge technology
    • ensure efficiency and bring economies of size and scale in the manufacturing sector
    • make Indian companies and manufacturers globally competitive
  • These schemes have the potential of significantly boosting production, employment and economic growth over the next five years or so.
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