Manufacturing sector looks for policy continuity, fresh PLIs

With the Narendra Modi-led NDA government starting a third term, the manufacturing sector is looking forward to policy continuity, capital infusion, and fresh PLI schemes to further bolster India as a manufacturing destination of choice for foreign firms as well as to build a robust and resilient supply chain ecosystem.

And industry insiders are not worried about the coalition nature of the government. In fact, the entry of Chandrababu Naidu-led Telugu Desam Party's (TDP) into the ruling alliance is also being cheered by the industry as the new Andhra Pradesh chief minister is seen as someone who will push for reform and innovation in the space. He is being viewed as a “force multiplier”.

“It provides comfort that there are only two main alliance partners (with the BJP), of which Chandrababu Naidu is viewed as an extremely progressive, forward-looking politician and even when it comes to Nitish Kumar, if he wants to keep his prospects bright in Bihar, he would want the state to develop and prosper,” an industry body spokesperson told ET on condition of anonymity.

The new coalition regime would likely indicate a more “uniform distribution” of projects to various states, the person said.

“We are hopeful that projects will be more evenly distributed amongst states. Now, with the BJP coming into power in Odisha, and the state sharing a border with Andhra Pradesh and with its proximity to Visakhapatnam, it is possible that those areas could see a lot more industrial investment flowing in,” the person said.

Some other officials ET spoke with, however, felt differently.

They said it was likely that some big-ticket projects could go to Andhra Pradesh as Naidu is likely to bat heavily to develop the Chittoor belt from where he contested from. But they believed this was not necessarily a bad thing and would only intensify the competition between states for projects.

Overall, TDP partnership with BJP is seen as positive as Naidu is considered more accessible and receptive. The appointment of a cabinet minister from the TDP for civil aviation, for instance, is being welcomed as some feel it could lead to faster approvals for regional airports for southern states.

“There’s no nervousness or uncertainty,” an electronics manufacturing industry body representative told ET. “In fact, it (coalition) is being viewed as something that will only lead to more focus on manufacturing and further bolster the electronics manufacturing sector.”

The manufacturing industry is also keen that the PLI schemes, which have been huge successes in Modi's second term, will be taken forward and more PLIs will be introduced for traditional sectors as well like textile, cement, leather and so on.

For the electronics manufacturing industry, it seems like all eyes are set on the pending proposals with the India Semiconductor Mission (ISM) which are awaiting cabinet approval. Industry is hopeful that things will begin gathering steam post the budget in July.

For the automotive sector, expectations of policy continuity and the continued focus on Make in India are fuelling optimism.

“The general sentiment is very positive as there is no expectation of the momentum reducing,” said Soumen Mandal, senior research analyst tracking the automotive sector at Counterpoint Research. “When it comes to the automotive and heavy industries sectors, there is a belief that there is no reason for a change in direction and that there will be policy continuity. These are sectors that are major employers and the government will want to boost it further in their third term.”