India’s Union Cabinet has expanded its Production-Linked Incentive (PLI) Scheme to include ten additional sectors. This move aims to elevate the nation’s manufacturing capabilities and exports in line with the Atmanirbhar Bharat initiative. Initially, the government introduced the PLI scheme for medical devices, mobile phones, and certain pharmaceutical ingredients.
Understanding the PLI Scheme
The PLI scheme offers incentives to companies based on the sales of products manufactured domestically. While the scheme encourages foreign companies to establish units in India, it also promotes domestic firms to initiate or extend their manufacturing facilities.
Expansion of the PLI Scheme
The scheme’s extension encompasses ten sectors: food processing, telecom, electronics, textiles, specialty steel, automobiles and auto components, solar photovoltaic modules, and white goods like air conditioners and LEDs . These sectors were chosen due to their capacity to generate jobs while increasing India’s self-reliance. The scheme’s implementation will last five years and cost an estimated Rs 1.45 lakh crore. Operational responsibility belongs to the relevant ministries and departments.
Wide-ranging Application of the PLI Scheme
The expanded scheme complements the existing PLI schemes for mobile phones, pharmaceutical ingredients, and medical devices. The list of products under this scheme now includes complex generics, anticancer and diabetic drugs, in-vitro diagnostic devices, and special empty capsules.
Advantages of the PLI Scheme
Implementation across these distinct sectors can enhance global competitiveness of Indian manufacturers, attracting investment towards core competencies and leading-edge technologies. Other expected outcomes include increased efficiencies, economies of scale, enhanced exports, and greater integration into the global supply chain.
Boosting the Digital Economy
With projections that India will have a USD 1 trillion digital economy by 2025, government initiatives like data localization, Internet of Things, Smart City and Digital India could lead to increased demand for electronic products.
Impact on Exports
The Indian pharmaceutical industry is among the world’s largest in volume and value, while its steel industry comes second globally. The introduction of a PLI scheme for Specialty Steel could further enhance manufacturing capabilities and increase total exports.
Securing Telecom Infrastructure
Telecom equipment is crucial for secure telecom infrastructure, and the initiative supports India’s aspiration to become a leading manufacturer of telecom and networking products.
Doubling Farmers’ Income
The growth of the processed food industry under PLI could ensure better prices for farmers and significantly reduce wastage.
Steps Forward
Increased production and exports of industrial goods will expose the Indian industry to international competition and ideas, bolstering its innovation capabilities. The promotion of the manufacturing sector and a supportive ecosystem can integrate India with global supply chains, establish backward linkages with the MSME sector in the country, stimulate overall economic growth, and create vast employment opportunities.