The Indian government’s production-linked incentive (PLI) scheme will give a boost to manufacturing capacity and help attract about Rs 4 lakh crore of capital expenditure in the 2022-2027 period, as per a report by the Investment Information and Credit Rating Agency of India (ICRA). This will result in the creation of over 30 lakh jobs.
The manufacturing space forms the major share of India’s total capital expenditure right now. Taking into account the rising demand in the areas of automobiles, semiconductors/electronics and solar and relevant manufacturing capabilities in terms of medical equipment, telecom gears and semiconductors, the Government has chosen the 14 sectors to be covered under the PLI with much thought.
Owing to a decrease in net imports, incremental revenues of Rs 35 to 40 lakh crore are expected over the next five years. Sectors under which the PLI scheme have been announced currently constitute 40 per cent of the total imports.
The scheme, it is hoped, will increase India’s annual manufacturing capex by 15 to 20 per cent starting FY23.
About 80 per cent of the total manufacturing outlay is focused on electronics, solar panel manufacturing and auto. Out of this, half of the outlay will be concentrated on the semiconductors and electronics value chain.
The PLI scheme comes at the right time, when India is emerging and getting noticed as a hub for manufacturing, the world over.
