‘Make in India’, Rs 95,000 crore 1-month PLI investments and counting

Encouraging locally produced: As part of the AatmaNirbhar and Make in India plan, government’s production-linked incentive (PLI) schemes for 14 different sectors have attracted over Rs 95,000 crore in investment till September this year. According to Commerce and Industry Ministry, under these schemes, as many as 746 applications under PLI were approved till November 2023. Republic Business delves deep into sector-specific policy interventions, that helped Government of  India’s industry-oriented scheme to click. 

Pharma Fervour  

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A focus on the growth of industry with help of PLI scheme, which kickstarted in July 2019, is gaining pace now.  After China started flooding active pharmaceutical ingredients (APIs)  in 2001, when it entered World Trade Organisation (WTO), concerns were raised over India’s dependence of critical API’s from China. However, the momentum to boost pharma sector has increased ever since government launched the PLI scheme for pharmaceuticals in 2021, with financial outlay of Rs 15,000 crore over a period of six years. Over 55 applicants were selected under the scheme, including 20 Micro, Small and Medium Enterprises (MSMEs) earlier this year. With fiscal year 2022-2023 being the first year of production for the PLI Scheme, Department of Pharmaceuticals earmarked ₹690 crore as the budget outlay. As many as four pharmaceutical companies- Dr. Reddy’s Laboratories Limited, Biocon Limited, Strides Pharma Science Limited and Premier Medical Corporation Private Limited - received the first tranche of incentives of up to ₹165.74 crore under the PLI scheme of the Department for Pharmaceuticals earlier this year. The scheme was floated to boost indigenous production of active pharmaceutical ingredients which are the key raw materials in manufacturing drugs. 

IT Hardware  

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The government has received a healthy response from all top global IT hardware makers under its PLI 2.0 scheme for hardware. IT Ministry’s data has indicated that 40 applications were received from top players, including HP, Dell, Asus, Acer, Lenovo, among others . These companies are now in a process to ramp up production in the country — directly or through domestic manufacturers and suppliers. Media reports have cited Apple Inc’s interest and a possibility of the company manufacturing in India in near future. Of the total laptop needs of the country, 75 per cent of needs are met through Hong Kong,  Singapore and China.  The government will provide 5 per cent incentive to brands on fresh local production of these IT products. The PLI scheme 2.0 for IT hardware scheme allows applicants to choose 2023, 2024 or 2025 as the base year for starting production and envisages an incentive of up to 5% on incremental sales, more than double the roughly 2% being offered under the first phase.

Auto Acceleration 

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Over a seven-year period, over which the PLI Scheme will pay out incentives, it is aimed to support production of about Rs 47,364 crore. This represents a healthy return on government investment of Rs 6,940 crore. This ambitious roadmap is supported by the fact that the government is likely to start crediting incentives under the Rs 26,000 crore production-linked incentive scheme for automobiles and auto components from the next fiscal year.  Automobile majors are said to have been skeptical of their ability to complete formalities for claiming incentives under the scheme within this year. The scheme was first notified in 2021. As the government now has a new initiative through  “Atma Nirbhar Bharat”, technology is expected to play a key a role in success of the PLI scheme.  

Ensuring that the input cost of basic raw materials must  be available at as close as possible to international prices,  electricity not only be reliable but cost comparable to those in China  and other countries, interest rates be brought down  and easy availability of land at  reasonable prices are some of the factors playing a pivotal role in the PLI schemes success. The process of sanction and realisation of loans being expedited and cash flow of country’s industry, coupled with public undertakings expedite payments to suppliers, and prompt refund of excess taxes paid are factors that will shape up future course of PLI scheme in the country.