Government extends benefits of PLI scheme to leather, container and bicycle makers, but how has it fared so far?

Manufacturing accounts for 15 per cent of India’s GDP, and boosting the sector can cut India’s reliance on imports to a great extent. Currently the raw materials for 14 key industries including electronics and automobiles, make up 40 per cent of India’s imports. Which is why the government has focused on these sectors for a production linked incentive (PLI) initiative, through which it will infuse Rs 2 lakh crore over the next five years.

The next set of incentives has arrived

Now leather, toy, containers and bicycle manufacturers have also been added to the mix by the government as they will receive Rs 35,000 crore collectively as PLI. This will be in addition to major incentives for industries such as semiconductor and display production, which will receive Rs 76,000 crore to provide 50 per cent capital support for anyone who sets up a new factory. To scale up the domestic manufacturing of containers, in light of a logistical crisis created due to the war on Ukraine, the government will also provide Rs 800 crore for the sector.

IT stays in focus

Apart from the above four, display panels and memory modules, which will be added to the IT hardware bucket, will also receive Rs 17,000 crore during the next phase of the PLI scheme. The PLI scheme is expected to create three million jobs across India by scaling up operations in the domestic manufacturing sector, according to Icra. It also has the potential to add 4 per cent to India’s GDP.

It it truly glitch-free?

Although the incentives are meant for boosting the Make in India initiative, several companies are reportedly struggling to meet targets under the PLI scheme. Those in the IT hardware sector have blamed chip shortages, which means that global headwinds continue to impact them despite incentives, and the industry is also seeking higher allocation of funds. The pharmaceutical industry is also seeking more incentives for drugs to benefit from PLI. At the same time, the Indian government is formulating another PLI initiative for the production of batteries to power electric vehicles.