Govt extends PLI Scheme to 10 new sectors with incentives of Rs 1460 bn

10 sectors eligible for Production-Linked Incentive (PLI) Scheme are ACC batteries, electronics/technology products, automobiles & auto components, pharmaceutical drugs, telecom & networking products, textile products, food products, solar PV modules, ACs & LED, and speciality steel
Govt extends PLI Scheme to 10 new sectors with incentives of Rs 1460 bn Mumbai

The Government of India has extended the Production-Linked Incentive (PLI) Scheme to 10 new sectors with additional financial outlay of Rs 1460 billion over a 5-year period to enhance India’s manufacturing capabilities and enhancing exports. The new sectors that are included for the scheme are advance chemistry cell (ACC) battery, electronic/technology products, automobiles & auto components, pharmaceutical drugs, telecom & networking products, textile products (man-made fibres and technical textiles), food products, high efficiency solar PV modules, white goods (ACs & LED), and speciality steel.

PLI Scheme was first launched in April 2020 for mobile manufacturing & electronic components, critical raw materials (drug intermediaries) and active pharmaceutical ingredients (API), and medical devices. The Union Cabinet has now has given its approval to introduce the Production-Linked Incentive scheme in the new 10 key sectors.

The PLI scheme will be implemented by the concerned ministries/departments (as mentioned in Table 1) and will be within the overall financial limits prescribed. The final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet. Savings, if any, from one PLI scheme of an approved sector can be utilised to fund that of another approved sector by the Empowered Group of Secretaries.

Table 1: Ten new sectors under PLI Scheme

Priority

Sectors

Implementing Ministry/Department

Approved financial outlay over a 5-year period (in Rs billion)

1

Advance Chemistry Cell (ACC) Battery

NITI Aayog and Department of Heavy Industries

181

2

Electronic/Technology Products

Ministry of Electronics and Information Technology

50

3

Automobiles & Auto Components

Department of Heavy Industries

570.42

4

Pharmaceuticals drugs

Department of Pharmaceuticals

150

5

Telecom & Networking Products

Department of Telecom

121.95

6

Textile Products: MMF segment and technical textiles

Ministry of Textiles

106.83

7

Food Products

Ministry of Food Processing Industries

109

8

High Efficiency Solar PV Modules

Ministry of New and Renewable Energy

45

9

White Goods (ACs & LED)

Department for Promotion of Industry and Internal Trade

62.38

10

Speciality Steel

Ministry of Steel

63.22

 

 

Total

1459.8

 

“The PLI scheme across these 10 key specific sectors will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and make India an integral part of the global supply chain,” said the Government press release.

ACC battery manufacturing represents one of the largest economic opportunities of the twenty-first century for several global growth sectors, such as consumer electronics, electric vehicles, and renewable energy. With an incentive of Rs 181 billion, the PLI scheme for ACC battery will encourage large domestic and international players to establish a competitive battery manufacturing set-up in the country.

India is expected to have a $ 1 trillion digital economy by 2025. Additionally, the Government's push for data localisation, Internet of Things (IoT) market in India, projects such as Smart City and Digital India are expected to increase the demand for electronic products. The PLI scheme, which aims to boost the production of electronic products in India, will be applicable for products like semiconductor fab, display fab, laptop/notebooks, servers, IoT devices, and specified computer hardware.

The automotive industry is a major economic contributor in India. The PLI scheme, financial outlay of Rs 570.42 billion, will make the Indian automotive industry more competitive and will enhance globalisation of the Indian automotive sector. Welcoming the move, Kenichi Ayukawa, President, Society of Indian Automobile Manufacturers (SIAM) & Managing Director & 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. We thank the Government of India for echoing its confidence on the Indian automobile industry, as the industry was eagerly waiting 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.”

The Indian pharmaceutical industry is the third largest in the world by volume and 14th largest in terms of value. It contributes 3.5 per cent of the total drugs and medicines exported globally. India possesses the complete ecosystem for development and manufacturing of pharmaceuticals and a robust ecosystem of allied industries. The PLI scheme will incentivise the global and domestic players to engage in high value production.

Telecom equipment forms a critical and strategic element of building a secured telecom infrastructure and India aspires to become a major original equipment manufacturer of telecom and networking products. The PLI scheme is expected to attract large investments from global players and help domestic companies seize the emerging opportunities and become big players in the export market. Telecom Equipment Manufacturers Association of India (TEMA), representing local telecom gear makers, expects the PLI scheme to result in Rs 2 lakh crore worth of production over the next five years and help in creating 1 lakh direct and indirect jobs in the country.

The Indian textile industry is one of the largest in the world and has a share of about 5 per cent of global exports in textiles and apparel. But India's share in the manmade fibre (MMF) segment is low in contrast to the global consumption pattern, which is majorly in this segment. The PLI scheme, with financial outlay of Rs 106.83 billion, is likely to attract large investment in the sector to further boost domestic manufacturing, especially in the MMF segment and technical textiles.

The growth of the processed food industry leads to better price for farmers and reduces high levels of wastage. Specific product lines having high growth potential and capabilities to generate medium - to large-scale employment have been identified for providing support through PLI scheme. Products like ready to eat (RTE), ready to cook (RTC), marine products, fruits & vegetables, honey, desi ghee, mozzarella cheese, organic eggs and poultry meat will be eligible for the scheme.

Large imports of solar PV panels pose risks in supply-chain resilience and have strategic security challenges considering the electronic (hackable) nature of the value chain. A focused PLI scheme for solar PV modules will incentivise domestic and global players to build large-scale solar PV capacity in India and help India leapfrog in capturing the global value chains for solar PV manufacturing.

White goods (air conditioners and LEDs) have very high potential of domestic value addition and making these products globally competitive. A PLI scheme for the sector will lead to more domestic manufacturing, generation of jobs and increased exports.

Steel is a strategically important industry and India is the world's second largest steel producer in the world. It is a net exporter of finished steel and has the potential to become a champion in certain grades of steel. A PLI scheme in specialty steel will help in enhancing manufacturing capabilities for value added steel leading to increase in total exports.

The new scheme will be in addition to the already notified PLI schemes for three sectors - Mobile Manufacturing and Specified Electronic Components, Critical Starting materials/Drug Intermediaries and Active Pharmaceutical Ingredients, and Manufacturing of Medical Devices - with financial outlays of Rs 513.11 billion (Rs 51311 crore).

PLI Scheme is a part of Aatmanirbhar Bharat initiative launched by the Union Government to promote an efficient, equitable and resilient manufacturing sector in the country. “Growth in production and exports of industrial goods will greatly expose the Indian industry to foreign competition and ideas, which will help in improving its capabilities to innovate further. Promotion of the manufacturing sector and creation of a conducive manufacturing ecosystem will not only enable integration with global supply chains but also establish backward linkages with the MSME sector in the country. It will lead to overall growth in the economy and create huge employment opportunities,” said the government press release.

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