Centre unveils PLI to encourage domestic manufacturing in 10 more sectors

Estimated outlay of ₹1.46 lakh crore planned over the next five years.

November 11, 2020 09:18 pm | Updated November 12, 2020 08:07 am IST - NEW DELHI:

Global value: The Centre says the PLI scheme is a clear signal that India is not turning protectionist.

Global value: The Centre says the PLI scheme is a clear signal that India is not turning protectionist.

The government on Wednesday unveiled a production-linked incentive scheme to encourage domestic manufacturing investments in ten more sectors, with an estimated outlay of about ₹1.46 lakh crore over the next five years.

Also read: Apple vendors may invest $900 million under production-linked incentive plan

The ten sectors, which Finance Minister Nirmala Sitharaman said had been identified on the basis of their potential to create jobs and make India self-reliant, include food processing, telecom, electronics, textiles, speciality steel, automobiles and auto components, solar photo-voltaic modules and white goods such as air conditioners and LEDs.

Earlier, the government had announced a production linked incentive or PLI scheme for medical devices, mobile phones and specified active pharmaceutical ingredients, with a proposed outlay of ₹51,311 crore. Now, several more pharmaceutical products have been brought under the aegis of the PLI scheme, including complex generics, anti-cancer and diabetic drugs, in-vitro diagnostic devices and special empty capsules.

“We have decided to introduce one more PLI like the one that was earlier announced and had got a good response [from investors and producers]. The selection of sectors has been based on job creation, [linkages with] the global value chain, the sunrise sectors and the larger principle of self-reliant India,” Ms. Sitharaman said, stressing that the Cabinet’s decision should be viewed as a clear signal that India is not turning protectionist.

Also read: Electronics incentive schemes launched

“This should answer the question ‘Does Atma Nirbharta mean inward looking?’ Not at all. We are once again proving it, even in PLI, we want to build on our strengths and link with the global value chain,” she said.

While the Minister and other Cabinet Ministers pegged the estimated cost of the PLI scheme at ₹2 lakh crore, an official statement from the Cabinet put the figure at ₹1,45,980 crore, with the largest chunk of over ₹57,000 crore allocated for automobiles and auto components production.

The Finance Minister said individual Ministries in charge of these sectors are ready to immediately implement the scheme. Applications to avail the benefits will be vetted by an Empowered Finance Committee, following which they will be taken up to the Cabinet for final approval. A window has also been kept open for new sectors to be included in the PLI scheme after acquiring a fresh approval from the Cabinet.

Also read; Protection from imports time bound, says NITI Aayog Vice-Chairman

“The PLI scheme across these 10 key specific sectors will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and make India an integral part of the global supply chain,” the statement said.

The Automotive Components Manufacturers Association of India expressed hope that the high outlay for the sector under the PLI will encourage industry to become a net exporter and help reduce import dependence. “We eagerly await the detailed contours of the scheme. Whilst the industry exports over 25% of its production, our ambition is to capture a significant proportion of global trade,” said the association’s president Deepak Jain.

Industry chambers welcomed the move and called for similar ideas to help more sectors of the economy. “The sectors covered under the PLI scheme are strategic, technology intensive and also important from the perspective of employment generation in the country. We also hope to hear about such progressive schemes for more sectors,” said Sangita Reddy, president of the Federation of Indian Chambers of Commerce & Industry (FICCI).

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