Production linked incentive (PLI) is not a protectionist scheme

 

• Any tariff protection to promote local manufacturing in India will come with an inbuilt sunset clause, the self­-reliance mission must not be equated to it becoming a ‘protectionist’ and closed economy. 
• The government is set to extend the production linked incentive (PLI) scheme for manufacturing pharmaceuticals, medical devices, and electronics announced under the Atma-Nirbhar Bharat package to six more sectors
• Explaining the rationale for the PLI schemes that It will soon become valid for ‘nine to 10’ sectors from four at present this is meant to incentivize investors already in the country to put up globally comparable capacities in scale and competitiveness.
• India’s efforts towards self­reliance were not dissimilar to what other nations are doing to insulate themselves from global supply chain shocks and revive the economy. 
• But it will be done in a global context. It will be done with India remaining open and trying to regain its share in global and regional production chains, it will be done concerning rulebound multilateral trading orders. It will not imply in any sense any form of isolation, closed economy, or protectionism
• The country will do its best to increase the share of trade in its gross domestic product (GDP). 
• If there is any support given to domestic enterprises, it will all be targeted towards creating globally competitive capacities and any support that we give them through tariffs would have an in­built sunset clause. I wanted to emphasize India’s commitment to a global economy with open order
• India is an open economy and will remain so. The tariff (import duties) protection given for domestic firms will not be forever and will have a sunset clause which means it will have an end date.
• "Aatma Nirbhar Bharat" should not be confused with that India is going to be a closed economy or protectionist or isolationism but rather it is giving "support" to its domestic industries so that they can become globally competitive and after that these incentives may be withdrawn. 
• The present policy of giving tariff protection to domestic industries is entirely different from the pas policies (in the post-independence period) as in the past we did not allow even domestic private firms not foreign firms in India and no foreign capital and it was a kind of Command Economy under govt. control. Presently, we are allowing/attracting foreign capital (FDI), attracting foreign firms, private companies, promoting exports but the only thing we are saying is for some time we will give support to the companies who are going to establish manufacturing/production capacity in India. I think it's a good move if we can phase out this support after some time to allow these firms in India to compete globally because protection/support for long makes the economy less efficient in the long term but in short term, it is a good move.

Source: The Hindu