November 24, 2022
The Capex under the Product Linked Incentive (PLI) schemes is expected to reach INR 1.7 trillion by FY26
Capex for semiconductors and Advanced Chemistry Cell (ACC) batteries will reach 70%
Financial support from the government for the production of semiconductors has totalled INR 60,000 crore
Electronic goods such as mobile phones and Information Technology (IT) hardware showed robust growth in FY22 and in the first half of this year
India’s PLI schemes are expected to make various industries increase their capital expenditure (Capex) by INR 1 trillion by FY24 and keep it at a healthy pace over the next two years, according to a report by credit rating agency ICRA.
The majority of this Capex will be dedicated to semiconductors and Advanced Chemistry Cell (ACC) batteries at 70%, owing to the recent developments of large-scale projects. According to the report, the Capex under the PLI schemes is expected to reach INR 1.7 trillion by FY26.
Electronic goods such as mobile phones and IT hardware showed robust growth in FY22 and in the first half of this year. Additionally, about 80% of the investment in other sectors is going to be initiated.
According to media reports, experts said that FY24 could be an inflexion point for a surge in India’s manufacturing Capex. The ICRA report further added that the financial support from the government for the production of semiconductors has totalled INR 60,000 crore. The semiconductor and electronics sector is expected to increase at a Compound Annual Growth Rate (CAGR) of 30-35% over a span of five years. Additionally, increased support for this sector’s growth comes from the US.
As global spending towards outsourcing India’s IT services increases over the years, the demand for domestic manufacturing of semiconductors will witness a sizable growth.
Source: Financial Express