With businesses flooding the government with demands for production-linked incentive (PLIs) schemes for more sectors, the Centre may extend such incentives to over half a dozen new areas in the Budget for 2023-24.
It is currently examining PLI proposals from about a dozen sectors, including leather and footwear, toys, cotton-based textiles, electrolysers, coalbed methane, coal gasification, bicycles, furniture, shipping containers, chemicals for paint and fertilisers.
A decision on extending PLI to new areas will be taken after factoring in the potential for local value addition and import substitution to boost investment and create jobs, a source said.
Tamil Nadu has asked for a PLI scheme for leather and non-leather footwear to make India a hub for exporters. The state has a 38% share in India’s footwear and leather products output and 45% share in India’s total leather exports.
On January 4, the Centre notified the National Green Hydrogen Mission in a policy push towards renewable energy and attaining the long-term goal of net zero energy. The cost competitiveness of green hydrogen would remain contingent on the extent of the reduction in capital cost of electrolysers and the competitiveness of renewal energy procurement.
“The timely implementation of the proposed PLI scheme to promote the domestic manufacturing of electrolysers will be critical,” Girishkumar Kadam, senior vice president & co-group head – corporate ratings, Icra, said.
Keeping in view India’s vision of becoming ‘Atmanirbhar’, PLI schemes for 14 key sectors with an incentive outlay of Rs 1.97 trillion are under implementation to enhance the country’s manufacturing capabilities and exports.
The schemes, most of which were launched in the last one-and-a-half years with some getting operationalised in the past few months, have made substantial progress only in a few sectors such as mobile manufacturing and pharmaceuticals.
Incentives worth about Rs 800 crore, mostly to mobile manufacturers, have been released so far, an official said, adding that another about Rs 3,000 crore would likely be released by March 31.
“Many of the PLI schemes, which require huge investments such as in speciality steel were operationalised in the past month or so. So, most of the investments, manufacturing and release of incentives are likely to happen in FY24, FY25 and FY26,” the official said.
Currently, PLI covers mobile manufacturing and specified electronic components, critical key starting materials/ drug intermediaries & active pharmaceutical ingredients, manufacturing of medical devices, automobiles and auto components, pharmaceuticals drugs, specialty steel, telecom & networking products, electronic/technology products, white goods (ACs and LEDs), food products, MMF segment and technical textiles, high-efficiency solar PV modules, advanced chemistry cell battery, and drones and drone components.
Approvals to 717 applications have been accorded under all 14 PLI schemes so far.
The PLI scheme for large-scale electronics manufacturing (LSEM) for mobiles is one of the most successful ones and has attracted leading global players, including Foxconn, Samsung, Pegatron, Rising Star and Wistron. Production of mobile phones has risen from about 60 million in FY15 to approximately 310 million in FY22.
As of September 2022, the PLI scheme for LSEM has attracted investment of Rs 4,784 crore, and led to the total production of Rs 2,03,952 crore, including exports of Rs 80,769 crore. The scheme has also generated employment of 40,916. Electronics manufacturing is expected to rise to $300 billion (Rs 22.5 trillion) by FY26.