PLI plan: India Inc tells PM it needs more action

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March 6, 2021 4:00 AM

PM Modi promises to do away with 6,000 compliances and to reduce logistics costs, among others

Addressing industry leaders from the beneficiary-sectors through a webinar, the Prime Minister promised to reduce the burden of India Inc drastically by doing away with as many as 6,000 compliance requirements, further improve ease of doing business and create multi-modal infrastructure to trim logistics costs.Addressing industry leaders from the beneficiary-sectors through a webinar, the Prime Minister promised to reduce the burden of India Inc drastically by doing away with as many as 6,000 compliance requirements, further improve ease of doing business and create multi-modal infrastructure to trim logistics costs.

Prime Minister Narendra Modi on Friday said the 13 production-linked incentive (PLI) schemes rolled out in the aftermath of the Covid-19 pandemic could lead to an incremental manufacturing output of $520 billion and double the workforce in relevant sectors over the next five years.

Addressing industry leaders from the beneficiary-sectors through a webinar, the Prime Minister promised to reduce the burden of India Inc drastically by doing away with as many as 6,000 compliance requirements, further improve ease of doing business and create multi-modal infrastructure to trim logistics costs.

Industry executives from sectors ranging from automobiles, electronics, telecom, pharmaceuticals, white goods and textiles who attended the webinar, urged the PM and other government functionaries, to suitably empower the empowered group of secretaries which is overseeing the schemes so that a flexible approach could be adopted in cases where improvisations may be required from time to time. For instance, in telecom equipment production, the caps on the incentives could be reviewed as production accelerates. If a mid-course correction requires a Cabinet approval, it could lead to costly delays, they pointed out.

The Prime Minister highlighted the need for a giant leap in the speed and scale of manufacturing, as this would boost employment in the country. The share of manufacturing in the country’s GDP has remained stagnant at about 16-17% for decades now. The latest target is to raise it to 25% of GDP by 2025.

Signifying a new policy paradigm, the government last year partially shed its long-standing and costly bias in favour of small businesses and earmarked big bucks for big firms under the PLI schemes. The total incentives under 13 such schemes, covering sectors, including telecom, electronics, auto part, pharma, chemical cells and textiles, stood at `1.97 lakh crore over a five-year period.

Friday’s webinar is part of the government’s broader initiative to fast rekindle growth impulses through a virtuous cycle of investments and soften the Covid blows to the economy.

The webinar was attended by commerce and industry minister Piyush Goyal; telecom, IT and law minister Ravi Shankar Prasad; textiles minister Smriti Irani; minister of state for commerce and industry Hardeep Singh Puri; and Niti Aayog chief executive Amitabh Kant, among others.

Business honchos, including TV Narendran (Tata Steel), Baba Kalyani (Bharat Forge), Dilip Sanghvi (Sun Pharma), Pawan Goenka (M&M), Virat Bhatia (Apple), BK Goenka (Welspun) and OP Lohia (IndoRama) attended the webinar that was divided into various sessions. Each session was attended by scores of industrialists.

Members of India Inc also urged that for every PLI structure the government should undertake detailed consultations with industry stakeholders and devise longer-term plans. Another important suggestion from the industry was that policies relating to PLI should be designed to compete with countries, rather than companies. They also said the government should undertake discussions with trusted allies in order to facilitate Indian industry becoming part of global supply chain.

With regard to PLI for mobile phones which started last year, since some companies are seeking a rollover of production targets for FY21 to the next fiscal to avail themselves of the incentives offered on incremental production, the industry members said given that FY21 saw an unprecedented crisis, the government should accede to the demand. They also said that a clear policy should be adopted on how to shift and build the component ecosystem.

Auto and auto components industry recommended that investments in technology development, R&D and innovation should be incentivised. They also suggested incentivising large auto component MNCs to establish their mother plants and sourcing hubs in India and, so that they can make India an integral part of their global value chain. A suggestion was also made that the auto PLI scheme should not cannibalise the existing exporters by incentivising new players.

On its part, with the businesses going through the reset phase after the substantial lifting of the lockdown curbs, the government hopes to make a sustained push now to draw investors. “An average of 5% of production is given as incentive. This means that PLI schemes will lead to production worth $520 billion in India in the next five years,” Modi said.

Illustrating the difference between earlier schemes and those adopted by his government through measures such as the PLI programmes, Modi said industrial incentives used to be open-ended, input-based subsidies; now they have been made targeted and performance-based through a competitive process.

“We have to attract cutting-edge technology and maximum investment in the sectors related to our core competency,” he added.

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