Abstract

The case is about the production-linked incentive (PLI) scheme for the food processing industry, announced by the Government of India to create global food manufacturing champions in the country. The government introduced the PLI scheme in March 2020 to boost domestic manufacturing and cut down on the import of processed food. The PLI schemes were the cornerstone of the government’s initiative for achieving a self-reliant India. The scheme was launched in several sectors including the food processing sector. In March 2021, the government approved the PLI scheme for the food processing industry (PLISFPI) with an outlay of Rs.109 billion. The scheme was planned to be implemented over six years (2021-22 to 2026-27). The goal of the PLISFPI was to accelerate the capacity of India’s domestic food processing ecosystem for select product segments, build up the brand image of Indian food products in global markets, and boost Indian exports. The scheme was meant for Indian companies and subsidiaries of multinational companies operating in India.. Under the scheme, companies were to be rewarded with incentives for increasing their output with respect to a defined base year (FY2019-20). The PLI scheme in the food processing sector, which is a sunrise sector, was expected to accelerate growth and employment, thereby contributing to the nation’s economy.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Analyze how the PLI scheme will help India revive its economy post COVID-19
• Analyze the government’s initiative to support creation of global food manufacturing in the country and make the country an integral part of global supply chains
• Evaluate the benefits and challenges of the production-linked incentive (PLI) scheme in the food processing industry
• Understand the piece rate method

Keywords

Indian economy; Public and private sector enterprises; Self-reliant India; Production-linked incentive; Sales-linked incentive; Food processing industry; Labor-intensive sector; Incentives on incremental sales; Domestic manufacturing; Import and export of goods; Domestic and global supply chain; Foreign Direct Investment; Remunerative prices for producers; Employment generation