PLI scheme allocation hiked by 33% in Budget 2024

The Narendra Modi government has hiked allocation towards its flagship Production-Linked Incentive (PLI) scheme for financial year 2025 to Rs 6,200 crore, up 33 per cent from FY24's budgeted estimate of Rs 4,645 crore.

Currently encompassing 14 sectors, such as mobile phones, pharmaceuticals, automobiles, and electronic products, the PLI scheme was initiated in 2021 with a budget of Rs 1.97 lakh crore.

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As of November 2023, the scheme has attracted investments of over Rs 1.03 lakh crore, resulting in production and sales amounting to Rs 8.61 lakh crore. Furthermore, it has facilitated the generation of employment opportunities for over 6.78 lakh individuals (directly and indirectly).

While the existing 14 sectors have seen significant benefits, concerns have been raised about the limited employment generation in certain areas. Before the announcement of the Interim Budget, Deloitte’s Rajat Wahi had emphasized the need for the PLI scheme to extend to sectors like leather, garment, handicrafts, and jewelry, highlighting their potential to significantly contribute to employment, especially among lower-income households.

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Exports, fueled by these schemes, have surpassed nearly Rs 3.20 lakh crore, with major contributions from electronics manufacturing, pharmaceuticals, food processing and telecom products.

The goal of the PLI scheme is to attract investments in crucial sectors and advanced technology. The schemes aim to enhance efficiency, bring economies of size and scale in manufacturing, and position Indian companies as globally competitive entities. A government press note emphasized that these schemes have the potential to substantially boost production, employment, and economic growth over the next five years.

Currently, around Rs 4,415 crore in incentives have been disbursed under PLI schemes for eight sectors, including large-scale electronics manufacturing, IT hardware, bulk drugs, medical devices, pharmaceuticals, telecom, food processing, and drones. A total of 746 applications across 14 sectors have been approved, with an anticipated investment exceeding Rs 3 lakh crore. Notably, 176 MSMEs are among the beneficiaries, spanning bulk drugs, medical devices, pharma, telecom, white goods, food processing, textiles, and drones.

These PLI schemes are a cornerstone of India's Aatmanirbhar plan, playing a pivotal role in driving self-reliance and economic growth.