Proposals for Production Linked Incentive (PLI) schemes for toys and leather and footwear are still “very much on the table” and the government is working on them although no announcements have been made on these since token allocations were sanctioned for both schemes in the interim Budget announced in February this year, sources said.

Simultaneously, the government is also considering changes in some of the existing schemes for sectors that are not doing as well as expected, such as textiles, auto, drug intermediaries and APIs, medical devices, speciality steel and batteries, to make them more attractive for investors, they said.

“Some provisions were made for PLI schemes in toys and leather and footwear in the last Budget. Work on the schemes was not expedited as the government has also been focussing on making the existing schemes work better. But the proposals are very much on the table and are being worked out,” a source said.

The time for announcing the schemes has not been decided yet and it could happen in next month’s full Budget presentation or later, the source added.

The PLI scheme for 14 sectors was announced by the NDA government in 2021 with an outlay of ₹1.97-lakh crore to incentivise local production in strategic sectors and encourage exports. These sectors include mobile manufacturing and specified electronic components; drug intermediaries and APIs; medical devices; automobiles and auto components; pharmaceutical drugs, specialty steel, telecom and networking products; electronic/technology products; white goods (ACs and LEDs), food products, textiles (MMF segment and technical textiles), high-efficiency solar PV modules, ACC battery, and drones and components.

Changes under way

“As only a handful of these sectors, mainly mobile manufacturing, have done well, changes in some of the other sectors are being worked out based on inputs from line ministries and industry representatives to make the schemes more flexible and attractive for investors,” the source said.

The PLI scheme is based on incentivising incremental sales of goods manufactured in India. Stakeholder consultations conducted by the DPIIT indicated that strict timelines and ambitious criteria for minimum investment and sales may have been acting as a barrier to investments in some areas. 

The interim Budget announced in February 2024 before the General Elections proposed extension of the PLI scheme to the leather and footwear sector with a token outlay of ₹2,600 crore, while for the toys sector, the token outlay was fixed at ₹3,489 crore. Commerce and Industry Minister Piyush Goyal had clarified that the schemes had not been given a Cabinet nod.

About ₹9,700 crore has been disbursed to PLI beneficiaries, which is about 5 per cent of the total allocation, per latest available data.

Related Topics