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Production-Linked Incentives for o Meet specific eligibility criteria based on
investment scale and sector.
Manufacturing o Differentiate eligibility criteria for larger
Context: companies, Foreign companies and Micro,
Recently, former Reserve Bank of India (RBI) Small and Medium Enterprises (MSMEs).
Governor Raghuram Rajan questioned the success of PLI Scheme in India:
the production-linked incentive (PLI) scheme in ❖ The PLI scheme was introduced by the Centre in
boosting India’s domestic manufacturing and exports. 2020. Initially, there were only three targeted
About Production Linked Investment (PLI) industries - Mobile and allied Component
Scheme: Manufacturing, Electrical Component
❖ It is an incentive based scheme introduced by the Manufacturing and Medical Devices.
Government of India for enhancing India’s ❖ So far, the government has announced PLI
manufacturing capabilities under its Atmanirbhar schemes for 14 sectors including automobile and
Bharat (Self Reliant India) initiative. auto components, electronics and IT
❖ The mission is to boost the manufacturing sector, hardware, telecom, pharmaceuticals, solar
create jobs while providing companies with an modules, metals and mining, textiles and
incentive on incremental sales on products apparel, white goods, drones, and advanced
manufactured in domestic units. chemistry cell batteries.
❖ Aim of the Scheme: Benefits of the PLI Scheme:
o Enhance global competitiveness of Indian The PLI scheme in India offers significant benefits
manufacturers. to eligible manufacturers, including financial
o Attract investments in core competency areas incentives:
and cutting-edge technology. ❖ Enhanced competitiveness
o Improve efficiencies and create economies of ❖ Reduced import dependence
scale. ❖ Increase job opportunities
o Promote exports and integrate India into the ❖ Identify the target product and increase its
global supply chain. manufacturing units
o Make India an attractive destination for ❖ Development of domestic industries
investment. ❖ Forming of a stable economy
❖ Working of the PLI Scheme: Under the PLI ❖ Technology upgradation
scheme, eligible companies are required to: Concerns:
o Establish large-scale manufacturing units. ❖ Structural Problem: Less demand and inadequacy
o Implement improvements in logistics and of research and development (R&D).
infrastructure.
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❖ Market Capturing: Globally, nations are trying to ❖ Structural Updation: Infrastructure has to be
capture the markets of others by exporting more fixed, the quality of education has to be improved
than what they import. at all levels, R&D investments have to be
❖ Shifting of Demand: In India, the demand is enhanced.
shifting from the unorganized to the organized o The conditions should be created to lower the
sector, and consequently leading to further risk of investment in R&D and rather to
marginalization. import technology needed to build internal
❖ Cronyism: The process of doling out subsidies strength.
involves discretion and is prone to cronyism. ❖ Demand Rise: Need to boost the demand by
❖ No Common Set of Parameters: There is no reducing inequalities, so that demand for mass
common set of parameters to understand the value consumption items will give a boost to the economy
added by companies that have received or are likely as a whole.
to receive incentives under the scheme. ❖ Investment: Need to put in efforts towards
❖ Lacking in Monitoring the Progress: India is promotion, facilitation and incentivisation of
lacking in creating a centralized database to investment.
monitor progress. ❖ Incremental Output: PLI is not a handout. It is a
❖ Target Missing: As per a report, out of the 14 post-facto incentive given when you have delivered
eligible sectors, only two or three were likely to the incremental output. So, once you have delivered
meet their first-year targets under the PLI scheme. the incremental output, only then do these
Points should be kept in the mind: incentives come to you.
❖ Micro Sector: Rather than protect large-scale ❖ Political Accountability: Need to strengthen the
industries, we need to boost the micro sector, which political accountability in our system.
is where the bulk of the employment is, so that we ❖ Regressive Indirect Taxes: Subsidies need to be
can generate enough demand in the economy. distinguished as it necessitates high indirect taxes,
❖ Core Sector: Need to focus on the sector as a core which results in high costs and prices rise. Indirect
sector (sectors that have high externalities or taxes tend to be regressive, so those at the bottom
multipliers for other economic activity), which will need to be supported by subsidies.
help in fostering industrialiasation. Conclusion:
❖ Targeting: It is very important to incentivise ❖ The PLI Schemes are set to make India a hub for
certain industries. Governments typically target manufacturing by reducing reliance on imports in
certain strategic sectors which have huge potential the short term and enhancing exports over the long
like nowadays emphasis is on green industries. term.
❖ Eye on learning from the World: Industrialisation ❖ Since, the focus is on key employment generating
and manufacturing don’t happen in a vacuum in this sectors, it is expected that the PLI Scheme would
globally integrated world. So, we need to be lead to an exponential rise in employment for
watchful of what other governments are doing and India’s vast and able workforce.
develop our own strategies accordingly.
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Key Takeaways from the Visit: Hinduism and Buddhism with Buddha’s birthplace
Lumbini located in present day Nepal.
❖ India would take forward the 2022 India-Nepal
vision document for cooperation in the power India Nepal Ties:
sector that sets an ambitious goal in IndiaNepal ❖ Economic:
power trade and transmission. o Trade: India remains Nepal’s dominant trade
❖ A long term Power Trade Agreement has been partner, steadily accounting for approximately
signed between India and Nepal. 60-65% of all trade with Nepal.
❖ India has set a target of importing 10,000 MW of o Investment: Indian firms are the biggest
electricity from Nepal. investors in Nepal, accounting for about 40%
❖ Plans were unveiled to extend Motihari- of total approved foreign direct investments.
Amlekhgunj- South Asia’s first cross-border There are about 150 operating Indian ventures
petroleum pipeline and to build a second such in Nepal. They are engaged in manufacturing,
pipeline. services (banking, insurance, dry port,
education and telecom), power sector and
❖ An MoU for the construction of a petroleum supply
tourism industries.
pipeline between Siliguri and Jhapa, besides
extensions to existing pipelines and construction of ❖ Political: Both countries share Open Borders under
new terminals were positive. Treaty of Peace and Friendship. Both countries
are also members of SAARC and BIMSTEC. Both
❖ Agreements signed:
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❖ Social: The two countries have close bonds through ❖ Disaster Management: Both countries are
marriages and familial ties, popularly known as working through BIMSTEC for collective disaster
Roti Beti ka Rishta. response. India’s assistance during 2015 is also
❖ Cultural: well appreciated by Nepal.
o India and Nepal share rich Hinduism and ❖ Regional Integration: Both countries are working
Buddhist cultural heritage. To continue this, to BBIN, BIMSTEC, SAARC to improve regional
both governments have also tried to build on connectivity and regional integration.
this shared cultural heritage. India and Nepal Unique Relationship: India-Nepal
have also signed sister-city agreements for ❖ Few countries have more intimate relations than
twinning of Janakpur-Ajodhya, Kathmandu- Nepal with India as they share an open border that
Varanasi, Lumbini-Bodhgaya. allows their nationals to move freely.
o India is also supporting 2 heritage projects, ❖ Their relationship is characterized by close
namely, Pashupatinath Riverfront economic, security and cultural ties.
Development and Bhandarkhal Garden ❖ India remains a major trade and transit partner,
Restoration in Patan Durbar. where a number of Nepalis continue to earn a living
❖ Water Resources: There are about 250 small and or pursue higher education.
large rivers flowing from Nepal to India and Recent State of Relation:
constitute an important part of the Ganges river
❖ Yet, their political relationship, in the near past, has
basin.
gone through more ebbs than flows, largely due to
o A three-tier bilateral mechanism was a border dispute over the Kalapani area.
established in 2008 to discuss all issues
❖ A change of government in Nepal with the fall of
relating to cooperation in water resources and
the hawkish regime led by Khadga Prasad
hydropower.
Sharma Oli and the restoration of the pre-2022
❖ Defence Cooperation: Indian and Nepalese election Nepali Congress and Maoist alliance to
military undertake annual joint military exercise power raised expectations of a thaw in this matter.
‘Surya Kiran’. India also provides equipment and
Recent Thaw in Relationship:
training to the Nepalese army to assist in its
❖ Alignment with Western and Indian interests:
modernisation.
o Dahal accepted the $500 million US grant
❖ Connectivity:
under the Millennium Challenge
o As Nepal is a landlocked country, it is
Corporation Nepal Compact, abandoning his
dependent on India for access to sea. Both
party’s view that it was part of the Indo-Pacific
countries have signed MoU to provide rail
security plan that would undermine Nepal’s
connectivity and are also working to develop
diplomatic non-alignment.
inland waterways in Nepal to connect Nepal
❖ Preference to India:
with the Indian ocean.
o Nepal wants to be seen as a friend to India as
o Establishment of Integrated Check Ports
he broke the tradition of top Nepali leaders by
along the borders, recent ones being Birgunj
choosing India for his first visit abroad
and Biratnagr, have also eased trade and transit.
instead of heading to Beijing.
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o There has been progress on resolving the points o Elevated Partnership: During the visit of Xi
of friction around hydropower projects that Xinping, Nepal and China elevated their ties
India is executing in Nepal. from Comprehensive Partnership of
o He has gone slow on projects under China’s Cooperation to Strategic Partnership of
Belt and Road Initiative (BRI) that Nepal Cooperation.
agreed to six years ago. o Connectivity:
Issues in Bilateral Relations: ▪ In 2017, Nepal formally joined the Belt
❖ Territorial Dispute: and Road Initiative (BRI) of China.
o In 2020 India’s defence minister virtually ▪ China is also developing a US$ 2.5 billion
inaugurated a new 80 km-long road in the trans-Himalayan railway connecting
Himalayas, connecting to the border with Tibet to Nepal’s capital city Kathmandu.
China, at the Lipulekh pass.
▪ China and Nepal have also signed an
o The Nepal government protested this and
agreement for construction of an all-
introduced a constitutional amendment which
weather road connecting Tibet and
made changes to the Nepali map to include
Kathmandu under The Trans Himalayan
that Kalapani, Limpiyadhura and Lipulekh
Multidimensional connectivity network.
of Uttarakhand as part of its sovereign
Significance:
territory
❖ Good ties with Nepal help India address security
❖ A growing trust deficit especially since the 2015
unofficial Indian blockade that crippled Nepal’s and geopolitical issues in its neighborhood more
economy and rise of territorial nationalism in both smoothly.
countries. Way Forward:
❖ Delay in Project Completion: The trust deficit ❖ Interdependence between Nepal and India is the
between Nepal and India largely affected the secret to reset the relations between the neighbors.
implementation of various Indian-aided projects in Towards this end, the two countries could also build
Nepal. At times, some of the Indian investment an international corridor along the border region to
projects had been attacked. enhance the trade between the two countries.
❖ Domestic Politics: Indian media’s sensationalized ❖ Institutional Mechanism: Both countries can also
reporting about Nepal recently, irresponsible create institutional mechanisms to play an active
statements by Nepali politicians like KP Oli, and role in several important multilateral forums such
Nepal border police fatally shooting an Indian man as BBIN, BIMSTEC, NAM, and SAARC to serve
have added to tensions and created a hostile their common interests.
environment for meaningful engagement.
❖ Full-fledged Engagement: India should remain
❖ Rising Chinese Footprint:
fully engaged with Nepal at all levels and across the
o Investment: In 2019 China accounted for political spectrum. The safeguarding of India’s
approximately 40% of new FDIs and 90% of vital interests demands such sustained engagement.
total FDI against India’s 30%.
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developed countries, emphasizing the need to align o In the 2023-24 Union Budget, the Railways
with global best practices and enhance India's received a record allocation of ₹2.40 lakh crore.
international image. However, when capital expenditure on crucial
activities related to safety such as track renewal
❖ Connectivity: Indian Railways plays a vital role in
and signalling and telecom are considered, their
providing connectivity, promoting economic
shares dwindled.
development, facilitating the movement of goods,
o A Parliamentary Standing Committee
and attracting investments. Ensuring safety is
report in 2023 observed that “appropriations to
essential for fostering seamless connectivity and
the Rashtriya Rail Sanraksha Kosh” has been
enabling growth.
falling short ever since it was introduced.
Challenges faced by Indian Railways:
o The Committee also noted that the Railways
❖ Human resource deployment problem: did not meet the target of earmarked allocations
o Semi-skilled workers: Indian Railways for the previous five years.
saddled with semi-skilled workers promoted ❖ Comptroller and Auditor General of India
from linemen to handle mechanical or Report on derailment in Indian Railways:
sophisticated electronic systems. o It had noted that around 75 per cent of the 217
▪ These ground level staff simply cannot consequential train accidents between 2017-
stand up to pressure from the traffic or civil 18 and 2020-21 were due to derailments.
engineering wings. ▪ And one of the major factors responsible
❖ Vacancy: for derailments was related to
o Data available shows 3.12 lakh non-gazetted maintenance of tracks.
posts were vacant. o There were shortfalls ranging from 30% to
o These vacant positions include those 100% in inspections by track-recording cars
responsible for safety, maintenance and required to assess the geometrical and
structural conditions of the tracks
engineering.
o The report also pointed to failures in the
o In the Central Railway alone, 14,203 vacancies
Track Management System, which is a web-
out of the 28,650 posts were in the safety
based application for online monitoring of
category.
track maintenance activities.
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