The Centre is evaluating the need for a Production-Linked Incentive (PLI) scheme for shipping containers in a post-pandemic situation where shipping costs have come down and shortages have eased but the capacity for domestic production exists, sources tracking the matter have said.

“In principle, the Shipping Ministry’s proposal for a PLI scheme for containers has been discussed within the government. It is acknowledged that India has steel plants and there are existing capacities. So we can make containers very easily in the country. What is  now being evaluated is its economic sustainability and the quantum of funds to be allocated, if the scheme is approved,” the source said.

While the industry felt a pressing need for containers during the acute shortages experienced during the Covid-19 times, the situation has somewhat eased now. “Shipping costs had zoomed during the Covid-19 pandemic when the shortage of containers was hurting traders globally, including in India. But, now shipping costs have come down to a tenth. The container shortage has also relatively eased. Business opportunities may come at a particular time but one needs to see if they are sustainable,” the source said.

For instance, if a company is making containers, it is important to see what agreement it can get into with a shipping line for containers supply. “The options the manufacturers would have should be economically feasible for the PLI scheme to succeed. It is also important to anticipate the level of demand from prospective investors for the proposed PLI scheme so that an appropriate allocation could be done,’ the official said.

According to industry estimates, the global shipping containers market size is around $8 billion and is likely to cross $12 billion in the next five years.

If the proposed PLI scheme for containers was found feasible, funding would not be a problem despite the fact that Budget 2024 did not allocate additional funds for it. “There are enough savings from the PLI funds already allocated. These savings would be used to fund new schemes, including the one for containers, once they are approved by the Cabinet,” the official said. 

The PLI scheme, announced in Budget 2020-21 with ₹1.97 lakh crore outlay to create global champions in manufacturing, is so far available for 14 sectors. These include pharmaceutical ingredients, large-scale electronics, medical devices, technology products, pharmaceutical drugs, telecom and networking products, food products, white goods, solar PV modules, auto and auto components, ACC batteries, MMF and technical textiles, specialty steel, and drones.

New PLIs are being discussed for many sectors, including toys, e-bikes, garments, and home accessories (all materials including cotton), high-end smartphone components, furniture, and leather footwear.

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