An estimated 1,300 units have been set up so far under the ambitious Production Linked Incentive (PLI) scheme, largely in sectors such as food processing, large-scale electronics, pharmaceuticals and medical devices, telecom, and drones. More than half of the units are already operational. Official sources have said that these units produced goods worth about ₹10 lakh crore and generated 7-8 lakh jobs.
The disbursement of PLI incentives to these units was about ₹10,000 crore, which is modest given the scheme’s ₹1.97 lakh crore total outlay. However, the government expects it to accelerate over the next two to three years. This is because most of the operational units are still in their first year of production and need to get their audit done before they claim incentives, a source said.
“The ₹1.5 lakh crore investments made under the PLI scheme announced in 2021 has gone into 1,300 units, half of which have started production, and the rest are in various stages of implementation. It is just a matter of time before they start claiming incentives. Investors who have put in money are certainly not going to run away,” a source tracking the matter told BusinessLine.
The source said back-of-the-envelope calculations based on the percentage of incentives offered by the fourteen sectors under the PLI scheme show that the production of ₹10 lakh crore already taken place alone should lead to incentives worth ₹50,000 crore.
“The fact that till now just ₹10,000 crore of incentive has been disbursed means that many of the units that are producing are yet to complete the mandatory minimum one year of production after which they can get their audit done and claim incentives. Also for some sectors the gestation period is longer and incentives can be claimed much later,” they added.
Of the 1,300 units set up under PLI, the highest number are in the food processing sector, but the investments here are low because most are in the small and medium sector, the source pointed out.
Job creation in manufacturing
The biggest in terms of size, volume, and monetary terms is large-scale electronics manufacturing, which includes mobile phones.
“The medical device scheme, which has attracted big names like GE, Philips and Siemens, also has high value production of items such as machines for MRIs, CAT Scand and X-Ray,” the source said.
Local production incentives
The PLI scheme, announced in 2021 for 13 sectors (later extended to one more) with an outlay of ₹1.97 lakh crore, is intended to incentivise local production in strategic areas and encourage exports. The support under the scheme, based on minimum investments and turnover, is provided over five years.
The 14 sectors include mobile manufacturing and specified electronic components; drug intermediaries and APIs; medical devices; automobiles and 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 and components.
So far, the scheme has proved successful only in a handful of sectors, most significantly in mobile manufacturing and, to some extent, in electronics, food processing, and pharmaceuticals.
“Sectors like textile, steel and solar PV are still in the gestation period. They will pick up going forward. Also some schemes are being revamped which will later attract more investments,” the source said.