The government has proposed to introduce an umbrella production-linked incentive (PLI) scheme with an allocation of about Rs 400 billion to replace the existing Merchandise Exports India Scheme (MEIS) scheme.

The scheme proposed aims to promote manufacturing and exports of specified goods from India and would be operational for a period of five years.

The umbrella PLI scheme could be adopted by any ministry that comes up with viable plan on import substitution and promotion of domestic manufacturing. Further, the government has proposed to fund the new scheme with an initial allocation of Rs 400 billion in the current year with allocation rising by about 10 per cent every year depending on the need. The allocation from the scheme would from what was required under MEIS.

According to industry sources, government proposes to expand the scope of PLI to cover around 10 more sectors. Apart from PLI, a phased manufacturing programme (PMP) will also be launched especially in areas of import substitution and where some domestic manufacturing capability exists.

The government is phasing out MEIS by December 2020.