The government may double the disbursements under production-linked incentive (PLI) schemes in this fiscal to Rs 15,000 crore. This would be more than double the amount of Rs 6,800 crore disbursed to various sectors in FY24.
The combined investments under the PLI schemes had hit Rs 1.3 trillion at the end of May, according to official estimates.
The PLI schemes were launched in 2021, covering as many as 14 sectors. However, only Rs 9,721 crore or 5% of the Rs 1.95-lakh-crore incentives earmarked for them was disbursed till March 2024.
The government is undertaking a revamp of the PLI schemes by relaxing the norms for the release of funds by accepting applications for the release of incentives every quarter, compared to the earlier norm of annual releases of the funds.
Of the Rs 14,837 crore estimated release of incentives in FY25, the large-scale electronics manufacturing sector, mainly mobile manufacturers, will account for a lion’s share of Rs 6,044 crore or 41% of the total disbursals.
Telecom and networking product firms are estimated to get Rs 3,434 crore or 23%, followed by pharma firms at about Rs 2,000 crore or 13%. Four sectors – automobiles and auto components, advance chemistry cell, textile products, and specialty steel – may receive some incentives for the first time in FY25.
Under PLI, firms would have to meet multiple criteria like investment, production, localisation and incremental sales to qualify for the incentives.
Another issue that is hurting the PLI schemes is the cumbersome procedure to claim incentives. For example, in the auto and telecom equipment PLIs, the products will be tested against mandatory benchmarks by the administrative departments, which are ill-equipped to handle these issues, officials said.
Experts at Crisil observed that sectors with a higher incentive-to-sales ratio and relatively straightforward rules for payouts such as mobile handsets may see the most payouts by fiscal 2028. However, at least eight sectors would see incentive payouts stretch until fiscal 2030.
Companies have invested around `1.28 lakh crore till May 2024 under all the schemes or about 43% of the `3 lakh crore committed. The investments have generated incremental sales/production of over `10.81 lakh crore and the creation of 548,000 direct jobs (another 291,000 indirect jobs also created).
Under the PLIs, pharma firms are the top investors with Rs 29,482 crore till May 2024 against their target of Rs 18,385 crore till FY25. Other top investors include high-efficiency solar PV modules (Rs 29,233 crore), automobile and auto components (Rs 17,896 crore), specialty steel (Rs 15,520 crore), and large-scale electronics (Rs 8,290 crore). Sectors which are lagging in investments include textiles.