Indian manufacturing sector gets Rs 1.45 lakh crore boost under PLI

Indian manufacturing sector gets Rs 1.45 lakh crore boost under PLI

Indian manufacturing sector will receive Rs 1,45,980 crore incentive under the Indian government’s Production Linked Investment (PLI) scheme for over next 5 years.

Under the PLI scheme, the union cabinet has selected 10 key sectors of the Indian manufacturing sector. These include automobile and auto components, advanced chemistry cell batteries, electronic products, pharma, telecom and networking products, textile, food products, speciality steel and white goods etc.

Announcing the scheme, Prakash Javadekar, Union Minister of Heavy Industries & Public Enterprises said the 10 sectors of the Indian manufacturing sector have been selected to boost India’s manufacturing capabilities and exports. “The scheme will make Indian manufacturers globally competitive, attract investment and enhance exports,” said the union minister.

PIC

The PLI scheme comes in the same line with Indian government’s AtmaNirbhar Bharat (Self-reliant India) initiative, which is the revised Make-in-India initiative of the federal government. Previously as well, the government announced a similar incentive-based scheme for the electronic manufacturing sector, particularly for the mobile phone manufacturing sector, aiming to curb the imports and enhance domestic manufacturing.

Under the proposal, the government will give incentives worth the Indian automobile and auto component manufacturing sector will receive around Rs 57,042 crore as incentive, which accounts for the lion’s share in the scheme. The pharmaceutical industry will receive around Rs 15,000 crore, while textile and food products manufacturing will receive an incentive of around Rs 10,683 crore and Rs 10,900 crore respectively.

Commenting on the PLI scheme, Kenichi Ayukawa, President, SIAM and MD & CEO, Maruti Suzuki India Ltd, said, “SIAM welcomes the announcement of Production Linked Incentive Scheme for enabling auto industry to be a part of the global value chain with an allocation of Rs 57,000 crores, over the course of next 5 years.” He also said that the Indian automobile industry was eagerly awaiting for this scheme to increase its competitiveness and take the growth of the sector to the next level. “We look forward to the details of the scheme that would be rolled out by Ministry of Heavy Industries & Public Enterprises,” further added Ayukawa.

Manufacturing sectorImplementing ministry/DepartmentApproved incentive under PLI
Automobiles & auto componentsDepartment of Heavy industriesRs 57,042 crore
Advanced chemistry cell batteryNITI Aayog and Department of Heavy IndustriesRs 18,100 crore
Electronic/Technology productsMinistry of Electronics and Information TechnologyRs 5,000 crore
Telecom and networking productsDepartment of TelecomRs 12,195 crore
Pharmaceuticals drugsDepartment of PharmaceuticalsRs 15,000 crore
Food productsMinistry of Food Processing IndustriesRs 10,900 crore
Textile, MMF segment and technical textileMinistry of TextilesRs 10,683 crore
Speciality steelMinistry of SteelRs 6,322 crore
High efficiency solar PV modulesMinistry of New and Renewable EnergyRs 4,500 crore
White goods (AC, LED etc)Department of Promotion of Industry and Internal TradeRs 6,238 crore

Advanced chemistry battery cell industry will receive Rs 18,100 crore as incentive, while electronics and technology products will receive Rs 5,000 crore. Telecom and networking product manufacturing industry will receive Rs 12,195 crore.

Talking about the PLI scheme, white goods industry governing body Consumer Electronics and Appliance Manufacturers Association (CEAMA) said the scheme will help in growth of domestic manufacturing, resulting in generating employment in the appliances industry. The size of the white goods industry in India is estimated to be around Rs 80,000 crore.

The Indian economy has been suffering from the prolonged global economic crisis for the last two years. The pandemic came as adding salt to the wounds. With the month-long national lockdown hammering the economy, the central government started drawing up an incentive scheme for the heavy manufacturing sector including the auto sector in June 2020. The aim has been doubling exports of made-in-India vehicles and auto components in the next 5 years.

Talking about the scheme, Finance Minister Nirmala Sitharaman said that PLI has been designed to ensure that critical sunrise sectors get necessary support from the government in a bid to build a country which is strong enough to serve the domestic market and link up with the global value chain. As she added, this will not only bring more investment in the Indian manufacturing sector, but will create jobs and boost the economy as well.

Despite being the third-largest economy of India, India’s manufacturing sector has been weaker in terms of exports. Also, the country has been reliant on other countries for value chain across several sectors. While the neighbouring country China has become a global economic power in terms of manufacturing across various sectors; a lack of incentives, land procurement issues, archaic labour policies have discouraged investment in India.

With the Indian economy contracted 23.9% during April-June 2020 and set to have its worst contraction of more than 10% in FY21, the government has been taking several reform measures in line with the ‘Self-reliant India’ initiative. One of them was the clearance of long-delayed labour reforms in September 2020. The next step comes as the PLI scheme.

Also read: Covid-19: A unique challenge or opportunity for mobility sector

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