Cabinet secy-led panel wants PLI scheme revamp to boost manufacturing

Suggests institutional mechanism, regular hand-holding for firms

A high-level committee headed by Union Cabinet Secretary Rajiv Gauba has suggested a revamp of the production-linked incentive (PLI) scheme to boost domestic manufacturing and make the initiative more investor-friendly by “regular hand-holding” and removing hurdles at the earliest.

The panel, in a recent meeting with different ministries, called for setting up an effective “institutional mechanism” to constantly engage with companies that have decided to participate in the Rs 1.97 trillion scheme, an official aware of the matter said.

The mechanism will focus on addressing challenges faced by investors, including global giants, which have shown interest in participating in the National Democratic Alliance government’s flagship scheme, the official said.

Last year, the Centre announced the PLI scheme -- now extended to 13 key sectors such as telecom, textile, automobile, white goods, and pharmaceutical drugs -- to improve cost competitiveness of locally produced goods, create employment opportunities, curb cheap imports, and boost exports. The scheme offers incentives to companies on incremental sales of goods manufactured in India for a period of five years.

“The idea is to engage with industry regularly, monitor various milestones achieved (as part of the scheme). There should also be regular hand-holding for companies,” the official cited above said.

A system will have to be introduced to enable prompt decision making and look into the “legitimate requirements” of the companies availing of incentives under the scheme, suggested the panel, which also includes senior officials of the NITI Aayog, finance ministry, and commerce and industry ministry.

The development comes against the backdrop of several companies, especially electronic manufacturers, requesting the government to relax the targets laid out under the scheme owing to disruptions caused by the Covid-19 pandemic. They have also sought a change in the base year from 2019-20.

While there has been no formal announcement regarding the easing of norms, a process-driven method to address the industries’ woes can boost investor confidence and promote ease of doing business. Apart from this, constant support from state governments will be required to resolve issues, including speedy clearances for setting up new units, the official said.

According to the government’s estimates, the PLI scheme will result in minimum production of more than $500 billion in five years in India. Besides, India is trying to diversify supply chains, amid tensions with China.

The panel has asked government departments to devise ways to reduce the timeframe for the implementation of the scheme. Besides, all schemes need to take off fully over the next three months.

Out of the 13 schemes, three schemes have been notified; seven have been approved by the Cabinet; and three – automobile, steel, and textile – are yet to get the Cabinet’s nod.