India’s PLI scheme is up for review: What’s the status of mega manufacturing plan?

The government is reviewing its Production-Linked Incentive (PLI) scheme today to address structural problems as well as snags. The government might consider reopening the window for several sectors and also extending it to more sectors. The PLI scheme was first introduced in 2020 for three sectors and more were added to it later.

Today, the PLI scheme is available in 14 manufacturing sectors: mobiles, medical devices, telecom & networking products, automobiles and auto components, pharmaceuticals, drugs, white goods, specialty steel, electronic products, food products, textile products, solar PV modules, advanced chemistry cell battery and drones and drone components.

The PLI schemes are the cornerstone of the government’s push to domestic manufacturing. By subsiding production, the government aims to boost exports, curb cheap imports and generate jobs by creating global manufacturing champions.

How has the PLI scheme performed so far?
In its three years, the PLI scheme has been launched for different sectors at different times. The government has allocated Rs 1.97 lakh crore for the PLI schemes for the 14 sectors. Till March 2023, 733 applications were approved in 14 sectors with expected investment of Rs 3.65 lakh crore. Actual investment of Rs 62,500 crore has been realized till March 2023 which has resulted in incremental production/ sales of over Rs 6.75 lakh c ..

Incentive claims of over Rs 3,420 crore have been received under the scheme for eight sectors – large-scale electronics manufacturing; electronics and technology products; bulk drugs; medical devices; pharmaceuticals; telecom and networking products; food items; and drones, of which over Rs 2,800 crore have already been disbursed. The highest disbursal of Rs 1,649 crore was made in large-scale electronics manufacturing, followed by pharmaceuticals at Rs 652 crore, and food products at Rs 486 cro ..

“We expect the disbursement to pick up…Projects are on the ground, and investments and employment are happening. The disbursement will follow…But yes, there is a lag,” Rajesh Kumar Singh, the Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) siad recently.

There was an increase of 76 per cent in foreign direct investment in the manufacturing sector in 2021-22 ($21.34 billion) compared to 2020-21 ($12.09 billion).