Picking Stock Gems based on PLI Scheme (Part 1)

0. What is this post about?

The Indian government, via its annual budget, provides incentives to certain industry sectors. With the government’s support, these industry sectors are able to increase their revenue in the coming years. Typically, the government provides multi-year support spanning over 5 years or more. This allows companies to plan for long term capital expenditure, in order to reap benefits from government schemes.

Studying and understanding these government schemes, can help retail investors pick listed stocks in corresponding industry sectors. With long term growth visibility, a certain government support, retail investors with mid to long term investment horizon can selectively pick stocks to get good returns from earnings growth in these companies, and participate in government driven economy growth.

In this post, we will understand one such government scheme — Production Linked Incentive (PLI). We will cover one out of thirteen sectors under the PLI scheme in this post (Auto Component sector), part one of five part series posts. Let’s get started.

1. What is a PLI Scheme?

1.1 What is PLI?

The Indian government generates income by levying taxes on companies, salaried…