The Centre may extend the Production-Linked Incentive (PLIs) scheme to new areas including toys, bicycles, furniture and construction equipment soon, to support private investments and job creation.
These PLI proposals are at various stages, but are likely to be cleared soon. Toys, bicycles and furniture are labour-intensive sectors with significant MSME presences,” a senior official told FE.
The proposed new PLI schemes would be accommodated under the existing incentive package of Rs 1.97 trillion announced for 14 sectors in ten years through 2030.
Thanks to various measures taken by the government, import of toys declined to Rs 870 crore in 2021-22 from Rs 2,960 crore in 2018-19. Exports of toys by India have shot up Rs 1,017 crore during the April-December period this fiscal and was Rs 2,601 crore in 2021-22. Toys industry, mostly consisting of MSMEs, have been seeking a PLI for the sector to boost domestic manufacturing and exports from the labour intensive sector.
Indian Construction Equipment Manufacturers Association (ICEMA) has been demanding a PLI scheme to grow to enable construction equipment manufacturers to overcome short-term cost disability, largely led by high logistics costs, and compliance and regulation-related costs.
Aided by the government’s Rs 111 trillion National Infrastructure Pipeline (NIP) implementation in six years through FY25, ICEMA’s Vision Plan 2030 envisages the Indian construction equipment industry to triple sales volume over the current decade to $25 billion in revenue in the next decade.
The PLI 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.
However, investment-heavy sectors such as speciality steel, automobiles and auto components are yet to take off.
PLI incentive disbursements may be just Rs 1,500 crore at the upper end in FY23 as against the aim of Rs 4,000 crore as the implementation of the schemes in most big sectors such as steel, battery cell and auto are delayed.
The bulk of the benefits in FY23 has gone to mobile manufacturers. Officials expect most of the PLI investments, manufacturing and release of incentives are likely to happen in FY25, FY26 and FY27.
Out of the Rs 1.97 trillion incentives for all PLIs, the utilisation would be below Rs 1.5 trillion in the best case scenario by
2030,” the official said, pointing to various conditionalities to be complied with by manufacturers to get the incentives.
PLIs, which have been focusing on integrating existing manufacturing value chains to reduce import dependence and improving competitiveness to support exports as well, could generate capital spends of Rs 2.5-3 trillion by companies, according to rating agency Crisil
However, delays in approvals for complex sectors such as ACC
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.