Phased manufacturing programme
Also called: PMP · Topic: Industrial Policy, Public Sector, MSMEs and Disinvestment · NCERT: Beyond NCERT
Meaning
A phased manufacturing programme (PMP) is a plan to make more of a product's parts inside the country, step by step. It uses graded tariffs. A tariff is a tax on imports. Each year, the tariff is placed on one more component, so importing that part costs more and making it at home becomes cheaper. The aim is to raise domestic value addition, meaning the share of the product's value that is actually created in India. Without it, the country may only assemble imported kits.
Example
India scrapped PMPs in 1991. It brought the idea back in 2017 for mobile handsets. Import duties were added in stages on chargers, batteries, displays and PCBAs (printed circuit board assemblies). This pushed phone makers to produce these parts in India over time.
Don't confuse with
- Production-linked incentive (PLI): PLI rewards firms with a percentage of their extra sales over a base year. A PMP works mainly by taxing imported parts in phases.
Related concepts
- Labour-intensive industrialisation
- Production-linked incentive
- Design-linked incentive
- Contract manufacturing
- Special economic zone
- Export processing zone
- Export-oriented unit
- Eight core industries