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Wednesday, February 21, 2024

PLI Scheme turns out to be a game changer for manufacturing sector

The Production Linked Incentive (PLI) Scheme, launched by the Narendra Modi government in March 2020, has turned out to be a game changer in giving a big push to India’s manufacturing sector, employment generation and exports.

The country has for the first time emerged as a strong exporter of electronic goods with India-made smartphones of top global brands Apple and Samsung spearheading the charge.

The PLI Scheme has led to major smartphone companies shifting their suppliers to India. These include Taiwanese giant Foxconn, Wistron and Pegatron.

In another major breakthrough on the industrial front, work is on to set up a factory to produce semiconductors by US chip giant Micron Technologies near Ahmedabad.

There has been a 60 per cent surge in India’s electronic goods exports in April-October this year to $15.5 billion compared to 2022-23 when $23.6 billion worth of electronic goods were shipped out during the entire year.

According to DPIIT Secretary Rajesh Kumar Singh, PLI Schemes resulted in a robust increase of 76 per cent in FDI in the manufacturing sector in FY 2021-22 (USD 21.34 billion) compared to previous FY 2020-21 (USD 12.09 billion).

The PLI scheme envisioned by Prime Minister Narendra Modi with the objective of making India ‘Aatma Nirbhar’ is built on the foundation of 14 sectors with an incentive outlay of Rs. 1.97 lakh crore (about US$ 26 billion) to strengthen the production capabilities and help create global champions.

Import substitution of 60 per cent has been achieved in the Telecom sector and India has become almost self-reliant in Antennae, GPON (Gigabit Passive Optical Network) & CPE (Customer Premises Equipment). Drones sector has seen a 7 times jump in turnover due to the PLI Scheme which consists of all MSME Startups, according to data compiled by the Commerce and Industry Ministry.

Under the PLI Scheme for Food Processing, sourcing of raw materials from India has seen significant increase which has positively impacted income of Indian farmers and MSMEs.

There has also been a significant reduction in imports of raw materials in the Pharma sector. Unique intermediate materials and bulk drugs are being manufactured in India including Penicillin-G, and transfer of technology has happened in manufacturing of Medical Devices such as CT scan and MRI.

Sectors for which PLI schemes exist and have seen an increase in FDI inflows from FY 2021-22 to FY 2022-23 are Drugs and Pharmaceuticals (+46 per cent), Food Processing Industries (+26 per cent) and Medical Appliances (+91 per cent).

PLI Schemes have transformed India’s exports basket from traditional commodities to high value-added products such as electronics and telecommunication goods, and processed food products.

Over 700 applications have been approved in 14 Sectors with expected investment of Rs 3.65 lakh crore. There are also as many as 176 MSMEs (micro, small and medium enterprise) among the PLI beneficiaries in sectors such as Bulk Drugs, Medical Devices, Pharma, Telecom, White Goods, Food Processing, Textiles and Drones, official data showed.

Actual investment of Rs 62,500 crore has been realised till March 2023 which has resulted in incremental production and sales of over Rs 6.75 lakh crore and employment generation of around 3,25,000. Exports have been boosted by Rs 2.56 lakh crore till FY 2022-23, according to official figures.

An incentive amount of around Rs 2,900 crore was disbursed in FY 2022-23 under PLI Schemes for 8 Sectors viz. Large-Scale Electronics Manufacturing (LSEM), IT Hardware, Bulk Drugs, Medical Devices, Pharmaceuticals, Telecom & Networking Products, Food Processing and Drones & Drone Components.

This has also resulted in a 20-fold increase in women employment and localisation in IT Hardware such as Battery & Laptops.

“We have been able to increase the value addition in mobile manufacturing to 20 per cent within a period of three years whereas countries like Vietnam achieved 18 per cent value addition over 15 years and China achieved 49 per cent value addition in over 25 years. Seen in this perspective, it is a big achievement,” says Rajesh Kumar Singh.

PLI Scheme for LSEM along with existing Phased Manufacturing Program has led to increased value addition in the electronics sector and in smartphone manufacturing to the tune of 23 per cent and 20 per cent respectively, from negligible in 2014-15.

Of the USD 101 Billion total electronics production in FY 2022-23, smartphones constitute USD 44 Billion including USD 11.1 Billion as exports, according to official figures.

(This article has been published via a syndicated feed)

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