Production Linked Incentives

Paving the way for the Next Manufacturing Hub of the World


Abhishek Goel

7/2/20232 min read

India has emerged as one of the fast growing developing country which can potentially replace China's Dominance in manufacturing the world's requirements in the Post Pandemic World. With this idea in mind, the Government of India has launched Production Linked Incentives (PLI) for 13 sunrise sectors where India does not have any significant manufacturing presence. Further, India has launched Indian Semiconductor Mission with an outlay of over USD 10 Billion with the aim to become the largest manufacturer of semiconductors. Both the plans of the Indian Government wishes to make India as a next manufacturing hub replacing China.

Sectors covered includes the following:-

i. Automobile & auto components

ii. Drones

iii. Chemicals

iv. Electronics - Both Consumer & Others

v. Food Processing

vi. Telecommunications

vii. Medical Devices

viii. Metal & Mining

ix. Pharmaceuticals

x. Solar Panel Manufacturing

xi.Textiles & Apparel

xii. While Goods - A/Cs & LED

xiii. Semiconductors

As on December 2022, 650 applications have been approved under 13 Schemes and more than 100 MSMEs are among the PLI beneficiaries in sectors such as Bulk Drugs, Medical Devices, Telecom, White Goods and Food Processing.

While the Indian Government is betting high on the PLI Scheme however, after 2 years of passing the pandemic, India is still struggling to get significant demand for the manufacturing. This is clear from the fact that the 1st Quarter import of India from China has expanded to USD 37.86 Billion which is highest of all times. Former Central Bank Chief of India, Dr. Raghuram Rajan has also questioned the efficacy of the PLI Schemes in increasing the manufacturing production of the country.

Indian Government is also facing tough competition from other South East Asian countries such as Vietnam, Bangladesh, Indonesia which are offering Direct SOPs to the Global Players to setup manufacturing in their country.

While the Indian Government is working towards sweetning the PLI schemes for the companies, it is worthwhile to mention that the Indian Government is also looking to include other products as follows:-

  1. Petrochemical & Base Chemicals

  2. Stainless Steel

  3. Leather

  4. Toys

  5. Cycle

It will be worthwhile to watch in the times to come how the PLI Schemes have transformed India's Manufacturing and whether the PLI can lead the way for India to become the next Manufacturing Powerhouse.