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New Delhi
Score NDA performance (on PLI) in the scale of 1 to 5
I will give a high 4 on clarity of vision but a poor 2 on design and implementation. The scheme encouraged participation from both foreign and Indian companies. However, most Ministries, except for MeitY, lacked the experience needed to design and implement these detailed plans effectively. This led to complex and overly detailed requirements, resulting in poor outcomes. The criteria set by the PLI across various sectors include demands on investment, production, sales, localisation, and types of inputs. Despite many companies starting production, they struggle to meet these stringent criteria and are unable to get incentives. Consequently, less than 5 per cent of the available funds have been used, and 80 per cent of that has predominantly benefited mobile phone companies. Excluding mobile phones, the results of the PLI have been underwhelming for most sectors.
What do you think could be the game changer for PLIs?
To improve the outcomes of the PLI scheme, it would be beneficial to review the criteria and provide incentives to firms that have begun production. However, the support should not favor companies that only assemble imported components, as these firms tend to vanish once incentives end. Additionally, sharing detailed performance data and encouraging discussions about it could help identify and address weak points. Currently, detailed sectoral data on PLI spending is not widely available.
What is the unfinished agenda?
The unfinished agenda involves replicating the success of the 1980s Maruti-Suzuki collaboration, which significantly boosted India’s auto sector, in electronics, high tech, and a few more sectors. This would require developing a local component ecosystem. A PLI could be introduced to offer substantial incentives for producing key components like PCBAs, memory units, and chips, which account for 60-80 per cent of the cost of most electronic devices. For textiles, the focus could be on synthetic fabrics and yarn, while for pharmaceuticals, it could target essential chemicals needed for APIs and KSMs. Achieving this level of deep manufacturing won’t be easy, as exemplified by China’s experience of taking over two decades to accomplish a similar transformation.
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