India's economic revival: PLI scheme likely to take center stage

In 2021-2022, the Production Linked Incentive (PLI) scheme is expected to take center stage when it comes to the government’s efforts in bringing the local economy back on track, through resurgence in economic activity and employment creation. These are in addition to India’s long-term goal of being self-reliant in manufacturing of key goods that are heavily imported, besides turning the table by encouraging exports.

PLI for smartphones and components: 16 schemes from equal numbers of companies have been approved to boost local production, value addition and, consequently, export of mobile phones. Apart from Rs 11,000 investments that the schemes will bring in, it is estimated to add 200,000 direct and 600,000 indirect jobs by 2025. The cabinet has already approved an outlay of Rs 40,995 crore (Rs 40,951 crore in terms of incentives and Rs 44 crore against administrative expenses) as manufacturers will be incentivised at 4-6 percent rate for incremental production with 2019-20 as base year.

 

PLI for pharma: With an outlay of Rs 15,000 crore over five years — between 2022-23 and 2027-28 — PLI for the sector has been introduced targeting 41 products. It seeks to reduce dependence on imports of bulk drugs and making India self-sufficient to meet local needs. At present, Chinese bulk drugs are cheaper by 25-30 per cent on an average compared to domestic products. Bulk drugs accounted for 63 per cent of the total pharmaceutical imports in the country in FY19. India sources 70 per cent of its active pharma ingredients (API) requirements from China. At present, a 10 per cent import duty on API is in place.

PLI for IT hardware: The PLI for IT hardware items like personal computers, laptops, tablets and servers is estimated to push yearly local production to Rs 330,000 crore by 2025-26, out of which 75 per cent will be exported. The Rs 7,350 crore outlay over the 4 years has been approved by the union cabinet to offer incentives on incremental sales. While, in the first year manufacturers will be offered 4 per cent incentive, by the fourth year it will come down to 1 per cent with 2019-20 as the base year. The scheme aims to establish India as a global hub for electronics system design and manufacturing.  As per Meity, by 2025, domestic value addition of 20-25 percent could be achieved from near zero now, apart from creation of 180,000 new jobs.

PLI for telecom equipment: To boost production of telecom and networking products that will help offset Rs 50,000 crore worth of imports. Further, the Rs 12,195 crore that has been outlayed for a five year period, is expected to help India export Rs 240,000 crore worth of items by 2025-26. An estimated Rs 3,000 crore of investments is expected in the sector.