Syllabus: GS3/ Economy & Development
In News
- The Government has decided not to extend the PLI Scheme beyond the existing 14 sectors.
- Despite initial success in some areas, the scheme underperformed in others and saw delays in incentive payouts.
More About the News
- Out of the $23 billion allocated, only $1.73 billion (8%) has been disbursed as of October 2024.
- $151.93 billion worth of goods have been produced under the scheme—just 37% of the original target. Firms like Foxconn, Reliance, and Adani faced delays, unmet targets, or non-compliance.
- Hence, the government has declined requests to extend production deadlines or add new sectors to the scheme.
About the PLI Scheme
- Lauch: In 2020 under the Ministry of Commerce & Industry with an outlay of ₹1.97 lakh crore.
- Sectors Included: It covers 14 sectors (Mobile, Pharma, Auto, ACC Battery, Telecom, White Goods, Solar, etc.)
- Objectives: It offers incentives to eligible firms on incremental sales for five years as part of the Make in India initiative.
- It aims to reduce India’s dependence on foreign countries like China and increase employment in labor-intensive sectors.
- Raise manufacturing’s share in GDP to 25% by 2025
- Incentive Mechanism: 4–6% on incremental sales over a base year.
- Applicable to both domestic and foreign companies registered in India.
Benefits of PLI Scheme
- Electronics Success: India produced $49 billion worth of mobiles in FY 2023–24; Apple now manufactures high-end models in India.
- Pharmaceutical Growth: Exports nearly doubled to $27.85 billion from a decade ago.
- Boosted FDI inflow, helped develop core industries, and supported India’s ‘China Plus One’ strategy.
- Encouraged production in strategic sectors (e.g., semiconductors, solar modules).
Issues and Concerns
- Low Disbursement: Only 8% of incentives disbursed despite meeting targets.
- Delays in Subsidies: They are not released on time, eventually affecting cash flow.
- Unmet Targets: Many firms failed to initiate or scale up production.
- Red Tapism: Bureaucratic hurdles and rigid compliance conditions.
- No GDP Boost: Manufacturing share fell from 15.4% to 14.3% (2020–2024).
Source: TH
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