The demand from the industry for expansion of the ₹1.97-lakh crore production linked incentive (PLI) scheme in the forthcoming Budget to incorporate new sectors and products is growing but the government is in a dilemma over whether it should immediately enlarge its scope or instead focus on successfully completing the schemes in the existing 14 sectors.
“Industry demands are continuously coming in for extension of the PLI scheme to their sectors. Consultations have been ongoing. But we cannot announce anything till things are finalised at all levels. The focus is on successful completion of the scheme in the 14 existing sectors. Let’s see how things pan out and if there is some Budget announcement,” a senior government official told businessline.
Sectors in focus
The new sectors and products for which the industry has been making a pitch include many labour-intensive items such as toys, footwear & leather, electronics components, jewellery, handicrafts, garments made of all fabrics and shipping containers.
“To create more employment opportunities in the country, we expect the forthcoming Budget to not only extend the PLI scheme for the existing sectors but also broaden the scope to sectors such as chemicals and services, leather, garments, jewellery and other consumer goods in which India needs to enhance its export share,” said Sanjeev Agarwal, PHDCCI President.
Interestingly, despite a token provision made in the interim Budget announced on February 1 for PLI in the toys and leather & footwear sectors, no announcement has been made yet.
In 2021, the Centre had announced the PLI scheme for 13 sectors (later extended to one more) with an outlay of ₹1.97-lakh crore, to incentivise local production in strategic areas and encourage exports. The support under the scheme, based on minimum investments and turnover, is to be provided over a period of five years.
The 14 sectors include mobile manufacturing and specified electronic components; drug intermediaries & APIs; medical devices; automobiles & components; pharmaceuticals, specialty steel, telecom products; electronic/technology products; white goods, food products, textiles (MMF segment and technical textiles), high efficiency solar PV modules, ACC battery, and drones & components.
So far, the scheme has proved to be successful only in a handful of sectors, most significantly in mobile manufacturing, and to some extent in ones like electronics, food processing and pharmaceuticals.
Investments
Per latest estimates, the PLI scheme has attracted ₹1.5-lakh crore investments (total investment expectation is ₹3-4-lakh crore), led to production worth ₹8-9-lakh crore of which ₹3-3.5-lakh crore were exported, the official said. Total disbursements of incentives are just about ₹10,000 crore, but were mostly in just a handful of sectors.
“There are some sectors such as automobiles, white goods and solar modules that are in the gestation period where we might see some more traction in the coming years. Then there are some others such as textiles and speciality steel where some tweaking may be needed to make them more attractive to investors,” the official said.
(With inputs from K R Srivats and Abhishek Law)