India is planning to introduce incentives amounting to approximately Rs 18,000 crore as part of its strategy to stimulate local manufacturing across six emerging sectors, according to reports from the Reuters news agency, which cites information provided by two government officials.
This initiative is part of the ambitious production-linked incentive scheme (PLI), originally launched in 2020 with the aim of targeting 14 different sectors, including electronics and drones. However, the scheme has experienced limited success, with only a handful of sectors benefiting significantly.
According to two government officials familiar with the matter, only a fraction of the incentives allocated under the PLI scheme have been claimed thus far. Consequently, the government is contemplating reallocating these unused funds to support the newly identified sectors.
The six sectors poised to join the PLI scheme encompass chemicals, shipping containers, vaccine inputs, toys, bicycles, leather, and footwear. These sectors will share the Rs 18,000 crore allocation, which will be derived from the original budget of the PLI scheme.
The PLI scheme holds significant importance for India as it aims to revitalize its overall economy, which has faced a lack of private investment for nearly a decade. The manufacturing sector, in particular, is grappling with the challenge of generating sufficient employment opportunities.
In the previous fiscal year, ending in March, India disbursed incentives worth nearly Rs 2,900 crore. Nevertheless, certain sectors, such as speciality steel products, solar modules, and car components, received minimal payouts, as revealed by a government document cited by Reuters.
For the current fiscal year, which commenced in April, disbursements are projected to increase to almost Rs 11,000 crore.
The government's internal analysis suggests that payouts could potentially reach Rs 40,000 crore by the fiscal year 2024/25. These estimations may be further enhanced with adjustments to the scheme, allowing for faster payouts and potentially granting some sectors additional time under the program.
