India puts its plan to snatch factories from China on fast-track

India will fast-track permissions and handhold investors putting up capacities under the various production-linked incentive (PLI) schemes as it seeks to reinvigorate manufacturing in the country.

Top officials of the Department for Promotion of Industry and Internal Trade, Niti Aayog and the finance ministry among others met last week for a status check with PLI investments having crossed the ₹25,000 crore March target. The holistic review of the scheme that neared two years showed while some sectors had over-performed, others were lagging.

Plan to Streamline Process

"Some sectors are progressing, but some are slow. We discussed how to handhold them in case any permissions are stuck and also ways to streamline the processes so that there is no misuse of funds," the official said. A streamlined process is also expected to avoid misuse of the Rs 1.97 lakh crore proposed PLI incentives. The sector schemes are implemented by the concerned ministry and started to roll out in FY22.

PLI Investments

PLI schemes have been announced for 14 so-called champion sectors so far, but they are progressing at varying rates, a government official aware of discussions told ET.

Investors committed Rs 2.34 lakh crore PLI investments as of March 2022 with automobile and auto components, advanced chemistry cell batteries, specialty steel and high-efficiency solar panels generating greater interest. The other PLI sectors are drones, white goods, textiles, telecom and networking products, food products, and medical devices.

This level of investment is expected to generate 6.4 million jobs over the next five years.

By the end of March 2022, eligible applicants had already invested Rs 26,000 crore.

Sector-specific PLI investments are shortlisted through a comprehensive selection process. The companies start investing in production facilities after the government approves their proposals. Once the actual production begins, benefits are disbursed after claims scrutiny.

Sector Progress

Among the new PLI schemes approved in 2021, the one for food processing is progressing fast because of quicker approvals and incentive disbursements are expected this fiscal. "Steel projects are big investments and take time. Their cycle of investment is up to March 2024," said the official cited above.

The PLI schemes for mobiles, electronics components, and pharmaceuticals were announced in 2020 and hence are ahead of others. In the white goods sector, 15 companies out of 64 approved are in the production phase while the remaining 49 are in the process of making committed investments.