PLI scheme to benefit Indian MSMEs: PM Narendra Modi

Production worth about $ 520 billion is estimated in the next five years in India only through the Production-Linked Incentives (PLI) scheme with the entire ecosystem associated with the sector benefiting from the scheme, said the Prime Minister
PLI scheme to benefit Indian MSMEs: PM Narendra Modi
Mumbai, 8 March 2021

The Production-linked Incentive (PLI) scheme, aimed to improve manufacturing capabilities and exports in the 13 identified sectors, will make a major impact on the country's micro, small and medium enterprises (MSMEs) ecosystem by creating the anchor units in every sector that will need a new supplier base across the entire value chain, said the Prime Minister Narendra Modi while addressing a webinar on PLI scheme organised by Department for Promotion of Industry and International Trade (DPIIT) and NITI Aayog through video conference.

PM Modi added, “Our belief behind the production linked incentives scheme is to expand manufacturing and exports. The philosophy behind the budget can prove to be consequential if we can give concrete shape to schemes in this webinar so that the manufacturing companies around the world make India their base and there is growth in the number and potential of our domestic industries and MSMEs.”

In November 2020, the Government of India (GoI) approved the Rs 1.45 trillion PLI scheme for ten sectors such as advance chemistry cell (ACC) battery used in consumer electronics, electric vehicles, renewable energy; electronic and technology products; automobiles and automobile components; pharmaceutical drugs; telecom and networking products; textile products; food products; solar PV modules; air conditioners, LEDs and speciality steel. On February 1, 2021, while presenting the budget 2021-22, Finance Minister Nirmala Sitharaman reiterated that GoI aims to spend Rs 1.97 trillion on various PLI schemes over the next 5 years, starting from this fiscal.

“A provision of about Rs 2 trillion has been made for the plans related to PLI scheme in this year’s budget. An average of 5 per cent of production is given as incentive. That is, production worth about $ 520 billion is estimated in the next five years in India only through the PLI scheme. It is also estimated that the workforce in the sectors for which the PLI is planned will be almost doubled. The PLI scheme is going to have a huge impact in employment creation. Besides the benefit from production and exports, the industry will also reap advantages due to increase in demand following the rise in income, i.e., double the profit,” said PM Modi.

According to the Prime Minister, the PLI scheme will have a cascading effect on the country’s MSME ecosystem as the anchor units (that will be built in every sector) will require a new supplier base in the entire value chain. “Most of these ancillary units will be built in the MSME sector. Work has already begun to prepare MSMEs for such opportunities. The MSME sector is getting a lot of benefit from the decisions to increase the investment limit and change in the definition of MSMEs,” he added. 

Urging the industry to the focus on creating best quality products for India and the world, Prime Minister Narendra Modi said the industry should innovate according to the needs of the fast-changing world, increase its participation in R&D, upgrading the manpower skills and use of new technology.

Speaking on the steps taken to boost trade and industry in this year’s Union Budget, the Prime Minister said that over the past 6-7 years, several successful efforts have been made to encourage Make in India at different levels. He stressed on the need to take a big leap, increase the speed and scale to boost manufacturing. He cited examples around the world where countries have accelerated the development of the country by increasing their manufacturing capacities. He said increasing manufacturing capacities would increase employment generation in the country proportionally.

The Prime Minister said the Government’s thinking is clear - Minimum Government, Maximum Governance and expects Zero Effect, Zero Defect. He said the Government is working at every level to promote the industry like Ease of Doing Business, reducing the compliance burden, creating multimodal infrastructure to reduce logistics costs, constructing district level export hubs. He said the government believes that government interference in everything creates more problems rather than solutions. Therefore, Self-Regulation, Self-Attesting, Self-Certification are being emphasized. He emphasised the need to make Indian companies and manufacturing being done in India, globally competitive and also, to create global recognition for our production cost, products, quality and efficiency. “We have to attract cutting edge technology and maximum investment in the sectors related to our core competency,” he said.

Underlining the difference between the earlier schemes and the schemes of the current government, the Prime Minister Modi said, “Earlier, industrial incentives used to be open ended input-based subsidies, now they have been made targeted and performance based through a competitive process. The 13 sectors have been brought under Production Linked Incentives for the first time. PLI benefits the entire ecosystem associated with the sector. With PLI in auto and pharma, there will be very less foreign dependence related to auto parts, medical equipment and raw materials of medicines. The energy sector will be modernised in the country with the help of advanced cell batteries, solar PV modules and specialty steel. Similarly, the PLI for the textile and food processing sector will benefit the entire agriculture sector.”

The Prime Minister said that PLI related announcements are being implemented with speed. He said recently approved PLI schemes in IT hardware and Telecom equipment manufacturing will lead to tremendous increase in production and domestic value addition. IT hardware is estimated to achieve Rs 3 trillion worth production in 4 years and domestic value addition is expected to rise from current 5-10 percent to 20-25 percent in 5 years. Similarly, telecom equipment manufacturing will witness an increase of about Rs 2.5 trillion in 5 years. We should be in a position to export worth 2 lakh crore from this, said the Prime Minister.

In the pharma sector, the Prime Minister expect more than Rs 15,000 crore investment in next 5-6 years under PLI leading to Rs 3 trillion in pharma sale and export increase worth Rs 2 trillion.

The Prime Minister Modi said the PLI scheme was launched last year to incentivise manufacturing of mobile phones and electronic components in India. Even during Pandemic, the sector manufactured goods worth Rs 35,000 crore last year, saw a fresh investment of about Rs 1,300 crore and created thousands of new jobs in this sector.
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