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CA Foundation · Business Economics · Indian Economy

The Government of India launched the Production Linked Incentive (PLI) scheme for manufacturing sectors. Which description best fits its working?

The PLI scheme pays eligible manufacturers an incentive linked to incremental sales of goods made in India over a base year. It rewards higher domestic production and scale, unlike import quotas, flat per-worker subsidies or price controls.

  1. AIt gives incentives to firms based on incremental sales of goods manufactured in IndiaCorrect
  2. BIt imposes a fixed quota on imports of finished goods
  3. CIt provides a uniform subsidy per worker to all firms irrespective of output
  4. DIt sets a minimum price at which manufacturers must sell goods

Explanation

PLI rewards eligible firms with a percentage incentive on incremental sales over a base year of products manufactured domestically, to boost output, scale and exports. It is output-linked, so a uniform per-worker subsidy irrespective of output is incorrect. It is not an import quota or price control.

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