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India to offer $2.2 bn incentives for manufacturing growth in six sectors
Industry News- Sep 21,23
This initiative forms part of India's 1.97-trillion-rupee production-linked incentive scheme (PLI), which was inaugurated in 2020. Among the six sectors poised to join the PLI scheme are toys, bicycles, leather, and footwear
India is poised to introduce incentives totalling 180 billion rupees ($2.2 billion) to stimulate domestic manufacturing in six newly targeted sectors, including chemicals, shipping containers, and vaccine-related components, according to two undisclosed government sources.
This initiative forms part of India's 1.97-trillion-rupee production-linked incentive scheme (PLI), which was inaugurated in 2020. Initially, the PLI focused on 14 sectors, encompassing electronic products to drones, with varying degrees of success. With only a fraction of the incentives having been claimed thus far, the government intends to allocate the unused funds to these fresh sectors.
The limited utilisation of the PLI program may result in substantial savings, which could then be redirected toward the new sectors, as disclosed by the two government insiders familiar with the plan. As details have not yet been disclosed publicly, these sources chose to remain anonymous. The federal trade ministry in charge of the scheme's execution has not responded immediately to requests for comment via email.
Among the six sectors poised to join the PLI scheme are toys, bicycles, leather, and footwear, according to the same sources. These sectors will share the 180-billion-rupee allocation, which is being reallocated from the scheme's original budget.
India views the PLI scheme as pivotal in revitalising its broader economy, which has struggled to attract private investment for nearly a decade and faces challenges in generating sufficient employment opportunities, particularly within the manufacturing sector.
In the previous fiscal year ending in March, around 29 billion rupees in incentives were disbursed. A government report, reviewed by Reuters, reveals that minimal payments were made to businesses operating in sectors such as specialty steel products, solar modules, and automobile components.
In the current fiscal year, beginning in April, disbursements are anticipated to surge to nearly 110 billion rupees, and they could reach 400 billion rupees by the fiscal year 2024/25, according to one of the two government officials, referencing an internal government analysis. The official suggests that adjustments to the scheme could lead to even better disbursement outcomes, potentially extending the program's duration for select sectors by an additional year or two.
Source: Business Standard
India
incentives
manufacturing
sectors
PLI scheme
chemicals
shipping containers
vaccines
toys
bicycles
leather
footwear
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