February 24, 2021
Budget allocated US$ 27.25bn for various PLI schemes, including US$ 5.66bn for the electronics goods manufacturing sector.
PLIs aim to reduce the dependency on imports and make the nation self-reliant, positioning India as a global manufacturing hub.
Centre has approved the PLI scheme for 13 sectors, including the mobile phones manufacturing, specified electronic components.
PLI scheme for IT hardware worth US$ 1.05bn shall boost hardware manufacturing exports by US$ 33.9bn.
For certain eligible manufacturing companies, the Government of India announced production linked incentive (PLI) schemes and provided them with a 4-6% incentive on incremental sales over the base year of 2019-20 for a five-year period. These schemes are like a kind of subsidy provided from the budget for domestically manufactured goods. The incentive amount is different for different sectors. The PLI scheme is set to motivate large domestic and internal firms to boost production, build a competitive ecosystem and lead to further inclusive growth in the country.
So far, the Centre has approved PLI scheme for 13 sectors, including the mobile phones manufacturing, specified electronic components. Recently, the government also approved a production-linked incentive (PLI) scheme for laptops, tablets, all-in-one computers, and servers, as it looked to pursue global players to tap India’s manufacturing capabilities. To push the manufacturing sector, this year’s union budget has allocated US$ 27.25bn for various PLI schemes over the next five years. In the wake of the pandemic, US$ 5.66bn has been announced for the electronics goods manufacturing sector, which will facilitate the growth of MSMEs, leading to inclusive growth and providing the required boost for economic growth. This growth has encouraged international companies to invest in India, thereby serving a two-fold purpose of attracting foreign investment and incentivising domestic manufacturers. In a similar move, the GoI has also announced a PLI scheme for IT hardware worth US$ 1.05bn, which will help add 1,80,000 jobs to the sector, according to India Cellular and Electronics Association (ICEA) and shall boost hardware manufacturing exports by US$ 33.9bn.
Under the aegis of PM Modi’s clarion call for an Atmanirbhar Bharat (self-reliant India), PLIs aim to help India evolve into an efficient and resilient manufacturing hub. The main goal here is to reduce the dependency on imports and make the nation self-reliant in manufacturing goods for local and export markets, positioning India as a global manufacturing hub. The increase in domestic manufacturing brings about more competitiveness, efficiency, capacity building, enhancing exports, attracting investments and creation of a plethora of job opportunities.