Rs. 2-lakh-crore boost likely for economy as Cabinet clears decks for PLI scheme in 10 sectors

On Wednesday, the Union Cabinet issued its nod in principle to expand the Production-linked Incentive (PLI) scheme to 10 industries. Over the next five years, the change is likely to see sops worth Rs. 2 lakh crore (US$ 161.64 billion) for 10 industrial sectors such as automotive, auto parts, battery production and white goods.

The automotive sector is likely to receive the bulk of the allocation of Rs. 2 lakh crore (US$ 161.64 billion) sops to the proposed sectors at Rs. 57,000 crore (US$ 7.68 billion), such as cell chemistry batteries, food products, textile products, solar PV solar products, etc.

Earlier this year, the government announced the PLI scheme for the cell phone, pharmaceutical, and medical equipment sectors in order to make India a manufacturing hub and raise exports.

Unlike other programmes, the PLI scheme is a result- and output-oriented programme where producers earn cash rewards for production over 5-7 years.

The PLI framework was introduced by the Centre to help many businesses consider diversifying their supply chains away from China in the midst of sustained friction between Washington and Beijing over trade.

The scheme has already been released in the electronics manufacturing sector for implementation. In the next few years, core electronics manufacturers such as Apple assemblers Foxconn, Pegatron and Wistron, as well as Samsung, and local players Karbonn, Lava and Dixon have secured strategic investments amounting US$ 100 billion.

In the next 5 years, manufacturers are expected to produce goods worth Rs. 11.5 lakh crore (US$ 154.90 billion) and to export products worth Rs. 7 lakh crore (US$ 94.29 billion) through the electronics sector scheme itself.

The government had previously said it was considering expanding the policy to 7-8 sectors after it was collected from electronics manufacturers with great enthusiasm.

Last month, Secretary of Economic Affairs Mr. Tarun Bajaj said the government is planning to expand the scheme to 7-8 more sectors to encourage domestic manufacturing.

"I have a great deal of confidence and optimism in the PLI system that we have put out for cellular phones, pharmaceuticals and medical devices, and there are around 7-8 sectors in the offing where the PLI system will be expanded," Mr. Bajaj said while addressing a virtual CII conference.

Unlike other programmes, the PLI system is an output- and output-oriented programme where producers earn cash rewards for production over 5-7 years, he said.

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