PLI payout for FY24 may lag behind govt's estimate of over Rs 11,000 crore

Ministries asked to ensure scheme is 'aggressively' monitored

The incentive outgo for the ambitious production-linked incentive (PLI) scheme during 2023-24 (FY24) is likely to fall behind the government’s estimate of over Rs 11,000 crore, according to people aware of the matter.

This is because companies are not able to claim incentives due to obligations set by the government being unfulfilled, insufficient applications, and slower than expected progress in some of the 14 schemes.

While the PLI scheme for textiles and steel has not shown much progress, incentives in some cases can be claimed starting FY25, after the gestation period ends this financial year. There have also been cases of a limited number of applicants in some schemes.

In FY23, the disbursement under the Rs 1.97 trillion scheme — launched in FY21 across 14 sectors to make India a manufacturing powerhouse — had stood at only Rs 2,874 crore, or 1.3 per cent of the outlay.

Of the estimated Rs 11,000 crore incentive, about Rs 6,000 crore is expected to be paid out under the scheme for mobile manufacturing. Around Rs 1,000 crore has been disbursed so far. For other schemes, the payout hasn’t been much as of now.

“The target for FY24 was more than Rs 11,000 crore. We don’t see that happening, and are working on revised numbers. Numbers (right now) are not very rosy. There will be greater clarity at the end of February or March, since most payments happen around that time (claims are made by December-end),” one of the people cited above told Business Standard.

Government officials said there was a system of annual payout of incentives in most schemes. As a result, hardly any progress was seen for most of the year.

Earlier this year, the government had said progress was slow in some sectors — steel, textile, battery, solar PV, and automobile — where incentive disbursements were yet to begin. A detailed analysis regarding the same was also done by individual ministries.

Schemes that are doing relatively well include mobile manufacturing, pharmaceutical drugs, bulk drugs, medical devices, telecom, food products, and drones.

“The automobile (PLI) scheme is picking up, but not to our satisfaction. So there is clearly an issue of laggards and frontrunners in the case of the scheme,” the person quoted earlier said.

Towards this, the government’s policy think-tank NITI Aayog and the Department for Promotion of Industry and Internal Trade (DPIIT) will also ask ministries to ensure that the PLI scheme is ‘aggressively’ monitored, and ministries deliver what they promised while seeking the scheme’s approval from the Union Cabinet, the official said.

The Centre is exploring if there is a need for course correction for any of the schemes. “As of now, the investment is on track. That gives us hope that the PLI scheme is not derailed, although it is not very smooth either. That apart, the overall performance should be looked at on a sectoral basis only,” the person said.