The government has opted to delay the introduction of the production-linked incentive (PLI) scheme for additional sectors until it assesses the effectiveness of existing initiatives. According to insiders, top government officials have received diverse feedback on the scheme, including insights from the Economic Advisory Council to the Prime Minister.

According to the sources, there are no upcoming PLI schemes. Government authorities believe it's crucial to adopt a wait-and-see approach because the expected performance from the scheme has not materialised yet. Out of the 14 schemes, only a few are performing well.

Launched three years ago with an allocation of Rs 1.97 trillion, the scheme aimed to boost domestic manufacturing and attract investments. Significant progress has been observed primarily in sectors such as mobile manufacturing, pharmaceutical drugs, bulk drugs, medical devices, and food products, where incentives and subsidy payouts have been the most substantial.

However, sectors like solar PV modules, steel, textiles, and automobiles have not shown promising results, with progress slower than anticipated. The government is currently evaluating whether there is a need for course correction in any of these schemes.

While various government departments have proposed new PLI schemes, they are pending approval from the Cabinet. For example, the Department for Promotion of Industry and Internal Trade had finalised two schemes worth over Rs 7,000 crore for toys and bicycle components towards the end of the previous financial year. Despite the Cabinet note being floated months ago, it is yet to receive approval.

There has also been a demand for new schemes for shipping containers, chemicals, and petrochemicals, leather, and some other products. There was anticipation that at least half a dozen new PLI schemes would be announced by the finance minister in the Union Budget in February. However, no new scheme was mentioned.

If new schemes are introduced in the future, there won't be a need for additional fund allocation. The savings from the initial schemes, amounting to Rs 11,848 crore, can be utilised.

Source: Business Standard