Sunset looms for PLIs with fading interest

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₹1.97 trillion (over $26 billion) to support manufacturing growth in 14 sectors, especially those that help in import substitution such as specialty steel and drone components. The outlay was for a period of five years starting 2022.

The scheme provides for an incentive of 4-6% to manufacturers on incremental sales of products manufactured in India over a five-year period. The idea behind the incentive scheme was to attract investments in manufacturing capacity, especially from foreign companies, and cutting-edge technology across these sectors, ensure efficiency, and bring economies of size and scale to make Indian manufacturing companies globally competitive.

So far, investments to the tune of ₹1.03 trillion (till November 2023) is estimated to have come in since the scheme's inception, according to the commerce ministry. The 14 sectors covered in the scheme were mobile manufacturing and specified electronic components; critical key starting materials/drug intermediaries and active pharmaceutical ingredients; manufacturing of medical devices; automobiles and auto components; pharmaceuticals drugs; speciality steel; telecom and networking products; electronic/technology products; white goods (ACs and LEDs); food products; textile products: MMF segment and technical textiles; high-efficiency solar PV modules; advanced chemistry cell (ACC) battery; and drones and drone components.

“Competitiveness is all about taking advantage of the economy of scale. However, my reading is that the capacities have been fragmented, with too many companies under certain sectors," said Biswajit Dhar, Professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University.