Launch 'PLI Plus' to focus on development to boost manufacturing: GTRI

The government should consider launching a 'PLI Plus' scheme with focus on development of new products, industrial designs and enhancing productivity with a view to boost domestic manufacturing, economic think tank GTRI said on Sunday.

A production-linked incentives scheme (PLI) is under implementation by the government with a budgetary outlay of about Rs 2 lakh crore for 14 sectors such as white goods, mobile, telecommunication and auto components.

The Global Trade Research Initiative (GTRI) report said that creating sustainable and competitive manufacturing is imperative to increase the share of manufacturing in GDP to 25 per cent by 2030, up from 15 per cent at present.

"This will require shifting focus to one step back. From quick manufacturing outcomes to R&D, reverse engineering, and deep work.

"This can be done under the Make in India framework with the launch of eight PLI Plus initiatives. These initiatives will strengthen the foundation of Indian manufacturing and aspire to bring the expertise level at par with developed countries like Germany, the US, Japan etc," GTRI co-founder Ajay Srivastava said.

Under the initiative, he called for focus on laying the foundation for new product development; enhancing productivity of entire product sectors; supporting industrial design, development and manufacturing to cut imports; and boost ease of doing business measures.

For the initiative, he suggested the government use Rs 1 lakh crore from the existing funds.

Creation of global quality basic science research set up; inviting more Suzuki, GE and Apple type of firms in india; developing end-to-end product ecosystems; supporting manufacturing of products made by small and medium-size firms; and localising production of fertilizer and plastics will help India strengthen foundation of its manufacturing and aspire to bring the expertise level at par with developed countries, it added.

"India must develop expertise in basic sciences, chemistry, metals, electronics, etc. These require long-term and sustained investment and collaborations with institutions across the world. Most such expertise is available only with firms located in Germany, Japan, and the US," it said.

India imported machinery of value USD 54 billion in 2022 and therefore India needs to reverse engineer these to enable local, high-quality manufacturing, it said, adding a beginning may be made by reverse-engineering products such as machinery for textiles sector, mining, and agriculture.

"India imported fertilizers worth USD 17 billion and plastics products of value USD 27 billion in 2022. Technology for making these products is at least five decades old, and India has abundant raw materials. We must explore if most imports of fertilizer and plastics serve the interests of the trading lobby," the report said.

Further, it suggested that the Ministry of MSME and the Department of Science and Technology devise an intensive program to identify high-potential existing manufacturers and handhold them to upgrade.

"A beginning may be made with the following products. These are imported in large quantities," it said.

The GTRI further said that most electronic products are made with lakhs of components and India must focus on developing this sector for sustainable advantage.

Currently, India imports most components.

"Our component strategy should concentrate on developing a component hub to facilitate quick imports, setting up manufacturing for low-end components, and allowing credit for duty-free imports to firms," it said, adding the government should look at setting up component hubs for prompt supply of imported components.

Component hubs will be Bonded Cargo warehouses allowing vendors to import and store components without payment of duty. The hubs will trigger domestic electronic and IT hardware goods ecosystem development, the report said.