Under the ambitious Production Linked Incentive (PLI) scheme, an estimated 1,300 units have been set up so far, mostly in sectors like food processing, large scale electronics, pharmaceuticals and medical devices, telecommunications and drones. More than half of the units are already operational. Officials said the units have produced goods worth around Rs 10 lakh crore and generated 700,000-800,000 jobs.
The disbursement of PLI incentives to these units is around Rs 10,000 crore, a modest amount considering the total disbursement under the scheme is Rs 1.97 lakh crore. However, the government expects it to accelerate in the next two to three years. This is because most operational units are still in their first year of production and need to complete their audits before they can claim the incentives, the people said.
“The investment of Rs 1.5 lakh crore made under the PLI scheme announced in 2021 has gone into 1,300 units, half of which have started production and the rest are in various stages of implementation. It is only a matter of time before they start claiming the incentives. We definitely do not want investors who have invested money to walk away,” a source tracking the issue told Business Line.
Sources said a rough calculation based on the percentage of incentives being provided to 14 sectors under the PLI scheme said that just the Rs 1000 crore production already done should translate into incentives worth Rs 5000 crore.
“The fact that only Rs 10 billion in incentives have been paid so far means that many of the producing companies are yet to complete the minimum one year of production to be audited and claim incentives. Also, some sectors have a longer lead time and may not be able to claim incentives until much later,” they added.
Of the 1,300 units set up under PLI, the food processing sector is the largest, but investment here is low as most of them are small and medium-sized enterprises, sources pointed out.
Creating jobs in manufacturing
The largest industry in terms of size, volume and value is large-scale electronics manufacturing, including mobile phones.
“The medical equipment plans, which have attracted major companies such as GE, Philips and Siemens, also include high-value production of equipment such as MRI, CAT scan and X-ray,” the source said.
Local production incentives
The PLI scheme, announced in the Rs 1.97 trillion budget for 13 sectors (later expanded to one sector) in 2021, aims to encourage local production in strategic locations and boost exports. Assistance under the scheme will be provided for a period of five years based on minimum investment and turnover.
The 14 sectors include Mobile Manufacturing & Selected Electronic Components, Pharmaceutical Intermediates & APIs, Medical Devices, Automobiles & Components, Pharmaceuticals, Speciality Steel, Telecom Products, Electronic/Technical Products, White Goods, Food, Textiles (MMF Segment & Technical Textiles), High Efficiency Solar Photovoltaic Modules, ACC Batteries, Drones & Components.
So far, the scheme has been successful in only a handful of sectors, most notably mobile manufacturing, and to some extent electronics, food processing and pharmaceuticals.
“Sections like textile, steel and solar power are still in their growth phase and will pick up in the coming days. Also, some schemes are being revisited which will attract more investments in the future,” the source said.
