Why PLI is India’s need of the hour?

It is not new that the Government of India banned 59 Chinese apps. Along with this, there has been a serious debate on whether the Chinese companies and products be prohibited as well. For a long time, our government has maintained an ongoing silence about this, in the private as well as the public world. However now it seems that maybe, soon, many companies, just not from China, may find replacements here in India.

What is PLI?

The Ministry of Electronics and Information Technology (MeitY) of India, tends to have the vision of a more empowered society and a developed nation. They are the government-led outlet for the electronic and the digital world. MeitY promotes e-governance for the growth of the IT, IteS, and electronic sectors which empowers the netizen of the country. Ensuring the efficiency of government sites, securing cyberspace, and increasing accessibility is its primary objective.

On the 1st of April, the Production Linked Investment (PLI) scheme was announced, that was following the National Policy on Electronics. The scheme says that considerations of 4-6% will be done on every India based Electronic company that will produce mobile phones and other electronic gadgets like transistors, diodes, thyristors, resistors, capacitors, and microelectromechanical (nano-electronic components) systems.

This scheme will be brought into effect by a Nodal Agency, that will, in turn, be working like a Project Management Agency (PMA). The Ministry of Electronics and Information Technology will designate certain responsibilities and will render support to secretarial, managerial, and implementation obligations, according to the scheme.

The Union Minister of India, Nitin Gadkari said that India would not allow Chinese companies to take part in highway projects. India even rejects the joint ventured plans, he stated. Amid the border standoff with China, the minister also assured that Chinese investors would be banned from other sectors like Micro Small and Medium Enterprises (MSMEs), as well.

Who all can apply?

Any electronic manufacturing company with its origin as Indian is free to apply for this. A company with its registered unit in India is also eligible. These companies can apply to seek incentives for their previously located industries all over India, or maybe create new units for further outlets.

The incentive scheme also incorporates the added outgo contracted by companies on R&D, transfer of technology, plant, and machinery of electronic devices mobile phones and other). This does not, however, involve the investment of the land and property done by the industries. None of those will be used to determine eligibility or be considered for any incentive.

The tenure of this scheme

The total period for this scheme is five years. The Fiscal Year 2019-20 will be added as the terminal year. Therefore, the incremented sales and the investments recorded after the base year will be added at the time of the calculation of the incentives.

Impact of PLI

Gadkari made it substantially clear that even if India goes for a foreign joint venture in the sectors of technology or R&D, consultancy, or even design, it won’t be Chinese. He elaborated about the scheme and said that if a contractor qualifies for small projects, we would automatically qualify for larger projects. He admits that the “construction norms are not good” and therefore, it is his contribution to encourage Indian companies.

Many analysts find this quite a revolutionary step towards improving the industrial sector of India. They believe that this would not only be an encouragement but the real answer to the country that has ‘back-stabbed’ India. More and more small scale contractors would dare to step up for bigger ventures.

However, some are apprehensive of this too. China is one of the biggest investors in India in this sector; the elimination of all of them can be a sudden pressure on the Indian economic structure. The companies like Alibaba, Huawei, Tencent, Xindia Steels LTD are one of the largest joint ventures between the two nations. Along with these, the China Electronics Technology Group and the SAIC Motor Corporation Limited, and even the Xinxing Cathay International Group that has an investment of about Rs 1,000 crore, all may face action. The studies of the government of India in 2018, mentioned some Chinese investors that have already gained control over a few specific Indian startups with their co-investing power.

According to the Chinese funding that is received to several companies here, Online Lending, E-commerce, and Social Media and Content are the top 3 market segments.

Do you ask why these companies need to stop functioning in India?

Recently, in June, the US had enlisted 20 Chinese companies who are owned or controlled by the People’s Liberation Army(PLA). These ventures directly link towards the Chinese Defense Sector, that is receiving profit out of several alleged “Big Names”.

It is bothering as to how much we as civilians contribute to our own nation’s destruction. This scheme might be a risky one, but it surely would save Indian money to go into Chinese pockets.