Indian Economy News

PLI scheme to draw US$ 35.95 – 47.93 billion (Rs. 3-4 trillion) investments over 4 years; boost private capex: ICRA

The Production Linked Incentive (PLI) scheme is expected to attract investments of US$ 35.95 – 47.93 billion (Rs. 3-4 trillion) over the next 4 years and generate 200,000 jobs, with significant projects anticipated in sectors such as semiconductors, solar modules, and pharmaceutical intermediaries, according to ICRA Executive Vice President and Chief Ratings Officer Mr. K Ravichandran. He noted that private sector capital expenditure is expected to increase in the oil and gas, metals and mining, hospitals, healthcare, and cement sectors. However, achieving record-high private sector capex will require the government to provide tax breaks to increase disposable income.

The PLI scheme, announced in 2021 for 14 sectors, including telecommunications, white goods, textiles, medical devices, automobiles, specialty steel, food products, high-efficiency solar PV modules, advanced chemistry cell batteries, drones, and pharmaceuticals has an outlay of US$ 23.61 billion (Rs. 1.97 trillion). As of November 2023, PLI schemes have witnessed over US$ 12.34 billion (Rs. 1.03 trillion) in investments and generated over 678,000 jobs. He emphasized the expected uptick in private sector capex in oil and gas, metals and mining, hospitals, healthcare, and cement sectors, particularly in green energy, renewable energy, and electric vehicles. He pointed out that capacity utilization in various industries has been around 75% for some time, and increasing demand is crucial for further investments in private capex. He also mentioned that the government is unlikely to alter the US$ 133.13 billion (Rs. 11.11 trillion) budgeted for the current fiscal year, highlighting the need for the private sector to step up given the constraints on increasing infrastructure spending.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.