PLI Schemes Attract Rs 62,500 Crore Investments Till March 2023

India's production-linked incentive schemes have attracted investments of Rs 62,500 crore till March 2023.

An incremental production/sales of over Rs 6.75 lakh crore and employment generation of around 3,25,000 have been recorded, according to the latest data released by the Department for Promotion of Industry and Internal Trade. Exports due to the scheme have been reported at Rs 2.56 lakh crore till FY23.

The PLI scheme was approved in March 2020 for three sectors and has since been announced for 14 sectors, with a total incentive outlay of Rs 1.97 lakh crore (around $26 billion) to strengthen production capabilities domestically.

The scheme offers performance-linked incentives to companies based on parameters such as incremental sales from products, export generation, contribution to local employment, and more. The uptick has been mixed across sectors, with mobile manufacturing, pharma, and food processing seeing more interest than others.

According to official data, incentives amounting to Rs 2,900 crore have been disbursed in FY23 under PLI schemes for eight sectors, which include large-scale electronics manufacturing, I.T. hardware, bulk drugs, medical devices, pharmaceuticals, telecom and networking products, food processing, and drones and drone components.

According to Rajesh Kumar Singh, secretary of DPIIT, the PLI schemes for toys, footwear, and new-age bikes are in "advanced stages". The new sectors are expected to be accommodated within the current allocation, he said on Tuesday.

However, a PLI for semiconductors, which has been on the industry wishlist, is not in the pipeline, Singh said, while not ruling out some other kind of incentive.

Key Figures (As On March 2023)

• Applications approved under 14 schemes: 733.

• Expected investment: Rs 3.65 lakh crore.

• Actual investment across schemes: Rs 62,500 crore.

• Employment generated: 3.25 lakh.

• Actual incremental production/sales: Rs 6.75 lakh crore.

• Exports till FY23: Rs 2.6 lakh crore.

• Incentives disbursed: Rs 2,900 crore.

PLI Impact on Raw Material Import

The PLI scheme has resulted in a reduction in imports of raw materials in the pharma sector, the release said.

"Unique intermediate materials and bulk drugs are being manufactured in India, including Penicillin-G, and transfer of technology has happened in the manufacturing of medical devices such as CT scans, MRIs, etc.," it said.

Similarly, the telecom sector has seen an important substitution of 60%—increasing domestic production of antennae, gigabit passive optical networks, and customer premises equipment.

"The drone sector has seen a seven times jump in turnover due to the PLI scheme, which consists of all MSME startups," the release said.

PLI in mobile manufacturing is also one of the more widely discussed PLI schemes, owing to the shift of suppliers—such as Foxconn, Wistron, and Pegatron—to Indian shores.

However, divergent views have surfaced, notably in a report co-authored by former RBI Governor Raghuram Rajan, which said that the sharp rise in exports has been accompanied by imports of inputs that go into making these devices, masking the actual net exports figure.

The report offers the explanation that companies might be importing knocked-down kits because of government tariffs and production-linked incentives to assemble phones in India, which were later exported, adding to India's export figures.