The 'Production Linked Incentive' (PLI) scheme differs from traditional industrial subsidies primarily because it:
- Provides upfront capital grants before the factory is constructed
- Rewards companies based on their incremental sales from goods manufactured in India, rather than just capital investment
- Is exclusively available to foreign multinational corporations and excludes domestic MSMEs
- Provides tax holidays for 20 years regardless of production volume
Answer: Rewards companies based on their incremental sales from goods manufactured in India, rather than just capital investment
Traditional subsidies often rewarded mere capacity creation (building a factory), which sometimes led to idle plants. The PLI scheme is strictly output-oriented; it provides a financial incentive (typically 4-6%) on the incremental sales over a base year. This ensures that government funds only flow when a company successfully scales up production, achieves economies of scale, and actually sells goods in the market, making Indian manufacturing globally competitive.