New Delhi: India is poised to provide substantial incentives amounting to ₹ 18,000 Crore ($2.2 billion) to stimulate domestic manufacturing across six burgeoning sectors, including chemicals, shipping containers, and vaccine inputs, as revealed by knowledgeable government sources.
This strategic initiative is a pivotal component of India’s ₹ 1.97-trillion-rupee Production-Linked Incentive (PLI) scheme, originally launched in 2020, which presently encompasses 14 diverse sectors, ranging from electronic products to drones. However, its remarkable success has been observed in only a handful of these sectors.
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A portion of the incentives designated under the PLI scheme remains unclaimed, prompting the government to consider reallocating these unused funds to invigorate the growth of new sectors.
The two government insiders, who opted for anonymity due to the absence of public disclosure regarding the plan’s specifics, indicated that limited disbursements under the scheme could result in substantial savings, which, in turn, could be redirected to support these emerging sectors.
The Indian federal trade ministry, tasked with overseeing the scheme’s execution, has not yet responded to an email requesting official comment on the matter.
The six newly identified sectors that are potentially poised to join the PLI scheme encompass toys, bicycles, leather, and footwear, in addition to the aforementioned sectors. These sectors are expected to share the ₹ 18,000 Crore (180-billion-rupee) allocation, which will be sourced from the original budget of the PLI scheme.
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India regards the PLI scheme as a pivotal catalyst for bolstering its broader economy, which has grappled with a dearth of private investment for nearly a decade and faces challenges in generating sufficient employment opportunities, particularly within the manufacturing domain.
In the fiscal year that concluded in March, incentives totaling nearly 29 billion rupees were disbursed. However, only a fraction of these incentives reached businesses operating in sectors such as specialty steel products, solar modules, and automotive components, as indicated by a government report referenced by Reuters.
For the ongoing fiscal year that commenced in April, disbursements are projected to increase to nearly ₹ 11,000 Crore rupees, with the potential to reach ₹ 40,000 Crore rupees by the fiscal year 2024/25, as outlined by one of the two government officials, referencing an internal government analysis.
“The disbursements are anticipated to surpass this estimate following certain adjustments to the scheme,” remarked the official, implying that these adaptations would expedite payouts, possibly extending support to certain sectors for an additional year or two under the program.