Keeping in view India’s vision of becoming ‘Atmanirbhar’, Production Linked Incentive (PLI) Schemes for 14 key sectors are under implementation to enhance India’s Manufacturing capabilities and Exports. The impact of PLI Schemes has been significant across various sectors in India. These schemes have incentivized domestic manufacturing, leading to increased production, job creation, and a boost in exports. They have also attracted significant investments from both domestic and foreign players.
As on date, 764 applications have been approved under PLI Schemes for 14 key sectors. 176 MSMEs are among the PLI beneficiaries in sectors such as Bulk Drugs, Medical Devices, Pharma, Telecom, White Goods, Food Processing, Textiles & Drones.
Actual investment of around ₹ 1.61 lakh crore (US$ 18.72 billion) has been reported till November 2024 which has generated Production/ Sales of around ₹ 14 lakh crore (around US$ 162.84 billion) against targets of 15.52 lakh crore up to FY 2024-25 and Employment of over 11.5 lakhs (Direct & Indirect).
PLI Schemes have transformed India’s exports basket from traditional commodities to high value-added products such as electronics & telecommunication goods, processed food products etc. PLI Schemes have witnessed exports surpassing ₹ 5.31 lakh crore (around US$ 61.76 billion), with significant contributions from sectors such as Large-Scale Electronics Manufacturing, Pharmaceuticals, Food Processing, and Telecom & Networking products.
Incentive amount of around Rs. 14020 crore disbursed under PLI Schemes for 10 Sectors viz. Large-Scale Electronics Manufacturing (LSEM), IT Hardware, Bulk Drugs, Medical Devices, Pharmaceuticals, Telecom & Networking Products, Food Processing, White Goods, Automobiles & Auto components and Drones & Drone Components.
Individual cases have been approved over a period of time, through a transparent mechanism. Projects are implemented over a period of time ranging from 2 years to 3 years, depending on the nature of manufacturing and claims are usually made after 1st year of production. Hence, most of the projects are at implementation stage and will be filing incentive claims in due course.
In the PLI scheme for specialty steel, about ₹20,000 crore of investments have been made by companies out of ₹27,106 crore committed and these projects have given a direct employment of 9000. Incentive of ₹48 crore has been released to the industry so far. The Ministry of Steel estimates that an incentive of ₹2,000 crore will be disbursed by the end of the scheme tenure. 14 of 58 projects withdrew from the scheme either because of change in business plans of the company and project execution delays.
It may be worth noting that as many as 35 companies have shown interest in the second round of the PLI scheme for specialty steel. A further commitment of ₹25,200 crore investment has been committed by these companies. The Ministry of Steel is in the process of selection and signing MoUs with these companies. An incentive of ₹3,600 crore is estimated to be disbursed to these projects.
Under the PLI Scheme for the Food Processing Industry, the deadline for filing claims is November 30 for Millets and December 31 for other categories. Most approved beneficiaries submit their claims in the second half of December, after which they are processed, and disbursements occur between January and March. Therefore, assessing incentive disbursements between April and October does not provide an accurate representation. For the FY 2022-23 claim year, an incentive of ₹474 crore has been disbursed. For FY 2023-24, the disbursement target is ₹700 crore, which is on track to be achieved.
The PLI Scheme for the Food Processing Industry (PLISFI) currently has 171 active beneficiaries across all categories. Given this large number, the withdrawal of six beneficiaries is not significant. Moreover, these applicants withdrew primarily due to their inability to meet their committed investment or expenditure on Branding & Marketing abroad.
The PLI Scheme has created immense impact across sectors and areas of the economy:
- Strengthening India’s position in Global Value Chains: India is now a part of key global value chains instead of being an importer of advanced/intermediate products and components.
- Under the PLI Scheme for Promoting Domestic Manufacturing of Medical Devices, 19 green-field projects have been commissioned and production of 44 products including high end medical devices such as Linear Accelerator, MRI machines, CT-Scans, Mammograms, C- Arms, Ultrasound machines etc., which were previously imported into the country has started.
- 84 companies under the PLI Scheme for White Goods (ACs and LED Lights) are set to bring investments of ₹ 10,478 crore, strengthening domestic capacity in AC and LED segment. For ACs, the selected companies will be manufacturing components like, compressors, copper tubes among others.
- Similarly, for LED Lights, LED Chip packaging, LED Drivers, LED Engines, LED Light Management Systems and Metallized films for capacitors etc. will be manufactured in India instead of being imported.
- Promoting Domestic Industry: More companies are setting up manufacturing units in India, including MSMEs and startups.
- The drone sector has experienced rapid growth, with turnover increasing seven-fold under the PLI scheme for Drones Drone Components. Driven by MSMEs and startups, this success has attracted significant investments and job creation, positioning India as a global leader in drone manufacturing.
- India has achieved 60% import substitution in telecom products under the PLI scheme for Telecom & Networking Products. Global tech companies have set up manufacturing units, turning India into a major exporter of 4G and 5G telecom equipment.
- Boosting Exports and Reducing Imports: India is progressing towards its goal being an advanced industrial, manufacturing-led economy and becoming self-reliant.
- India’s electronics manufacturing sector has flourished under the PLI scheme, transforming from a net importer to a net exporter of mobile phones.
- India’s position in the global pharmaceuticals market has expanded and it is the third-largest player by volume. Exports now account for 50% of production, and the country has reduced reliance on imports by manufacturing key bulk drugs like Penicillin G.
The purpose of the PLI Schemes is to attract investments in key sectors and cutting-edge technology; ensure efficiency and bring economies of size and scale in the manufacturing sector and make Indian companies and manufacturers globally competitive. These schemes have the potential of significantly boosting production, increasing manufacturing activities and contributing to economic growth over the next five years or so.
PLI Scheme is to give a kick start and to lay the foundation for creating a manufacturing ecosystem. All the approved sectors identified under PLI Schemes follow the broad criteria of focusing on key technologies where India can leapfrog and multiply employment, exports and overall economic benefits for the economy. These sectors were approved after vetting by NITI Aayog and after detailed deliberations with concerned Ministries/ Departments.
(Source: PIB)
