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Union Government approves Rs 1.46 lakh crore PLI scheme for 10 key sectors with the aim of transforming India into a manufacturing hub

Finance Minister Nirmala Sitharaman announced the Union government's decision to extend PLI scheme to 10 key sectors to boost India's manufacturing capabilities

In a big boost to Atmanirbhar Bharat campaign, the Union Cabinet chaired by the PM Narendra Modi today gave its approval to introduce the Production-Linked Incentive (PLI) Scheme in 10 key sectors for enhancing India’s manufacturing capabilities and enhancing exports.

“The policy that we are taking in the PLI, through which we want the manufacturers to come into India, is clearly to say we want to build our strength but yet link with the global value chains. India should become a manufacturing hub is always been the call by our honourable prime minister,” Finance Minister Nirmala Sitharaman said while addressing a press briefing after the Cabinet decision.

Here are the 10 key sectors along with the details of the financial outlay earmarked by the Union Cabinet:-

PrioritySectorsImplementing Ministry/DepartmentApproved financial outlay over a five-year period in Rs crore
Advance Chemistry Cell (ACC) BatteryNITI Aayog and Department of Heavy Industries18100
 2Electronic/Technology ProductsMinistry of Electronics and Information Technology5000
 3Automobiles
& Auto Components
Department of Heavy Industries57042
 4Pharmaceuticals drugsDepartment of Pharmaceuticals15000
 5Telecom & Networking ProductsDepartment of Telecom12195
6Textile Products: MMF segment and technical textilesMinistry of Textiles10683
 7Food ProductsMinistry of Food Processing Industries10900
 8High Efficiency Solar PV ModulesMinistry of New and Renewable Energy4500
 9White Goods (ACs & LED)Department for Promotion of Industry and Internal Trade6238
 10Speciality SteelMinistry of Steel6322
PLI scheme introduced in the above listed sectors

The total outlay has been pegged at Rs 1,45,980 crore. The Finance Minister Nirmala Sitharaman while making the announcement added that the scheme would entail an expenditure of Rs 2 lakh crore.

The PLI scheme will be implemented by the concerned ministries/departments and will be within the overall financial limits prescribed. The final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet. Savings, if any, from one PLI scheme of an approved sector can be utilized to fund that of another approved sector by the Empowered Group of Secretaries. Any new sector for PLI will require fresh approval of the Cabinet.

As per the press release issued by the Press Information Bureau, the PLI scheme across these 10 key sectors will strengthen the competitiveness of the Indian manufacturers globally, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and firmly embed India in the global supply chain.

ACC battery manufacturing represents one of the largest economic opportunities of the twenty-first century for several global growth sectors, such as consumer electronics, electric vehicles, and renewable energy. The PLI scheme for ACC battery will incentivize large domestic and international players in establishing a competitive ACC battery set-up in the country.

With regards to Electronics and Technology products, the Government’s push for data localization, Internet of Things market in India, projects such as Smart City and Digital India are expected to increase the demand for electronic products.

The automotive industry is one of the most significant contributors to the Indian economy. The PLI scheme in this sector will turn the Indian automotive Industry more competitive and will strengthen the globalization of the Indian automotive sector.

The Indian pharmaceutical industry is the third-largest in the world by volume and 14th largest in terms of value. It contributes 3.5% of the total drugs and medicines exported globally. India possesses the complete ecosystem for development and manufacturing of pharmaceuticals and a robust ecosystem of allied industries. The Union Cabinet decision of extending the PLI scheme in this sector will provide incentives to the global and domestic players to engage in high-value production.

Another crucial sector that also forms a strategic element of developing a secured telecom infrastructure is Telecom equipment. India aims to become a major original equipment manufacturer of telecom and networking products. This aspiration is expected to be fulfilled by the inclusion of the sector in the PLI scheme which would attract large investments from global players and help domestic companies seize the emerging opportunities and become big players in the export market.

The Indian textile industry is one of the largest in the world and has a share of ~5% of global exports in textiles and apparel. However, India’s share in the manmade fibre (MMF) segment is low in comparison to the global consumption pattern, which is majorly in this segment. The PLI scheme will attract large investment in the sector to further boost domestic manufacturing, especially in the MMF segment and technical textiles.

The development of Food Industry would directly affect the welfare of the Indian Farmers and reduce high levels of wastage. Products which hold high growth potential and capabilities to generate medium- to large-scale employment have been identified for providing support through PLI scheme.

Another important sector that would boost India’s commitment to lowering carbon emission is solar PV panels. The large imports of solar PV panels have posed huge risks in supply-chain resilience and bear strategic security challenges considering the electronic (hackable) nature of the value chain. The PLI scheme for solar PV modules will incentivize domestic and global players to build large-scale solar PV capacity in India and catapult India in capturing the global value chains for solar PV manufacturing.

White goods (air conditioners and LEDs) have very high potential of domestic value addition and making these products globally competitive. A PLI scheme for the sector will lead to more domestic manufacturing, generation of jobs and increased exports.

One of the most strategically important industries in India is Steel. India is the world’s second-largest steel producer in the world. It is a net exporter of finished steel and holds the promise of becoming leading exporter in certain grades of steel. A PLI scheme in Specialty Steel will help in enhancing manufacturing capabilities for value-added steel leading to an increase in total exports.

The Prime Minister’s clarion call for an ‘AatmaNirbhar Bharat‘ envisages policies for the promotion of an efficient, equitable and resilient manufacturing sector in the country. Growth in production and exports of industrial goods will greatly expose the Indian industry to foreign competition and ideas, which will help in improving its capabilities to innovate further. Promotion of the manufacturing sector and the creation of a conducive manufacturing ecosystem will not only enable integration with global supply chains but also establish backward linkages with the MSME sector in the country. It will lead to overall growth in the economy and create huge employment opportunities.

Earlier, a PLI scheme for mobile phone manufacturing was announced, where proposals by 16 phone makers were approved by the Ministry of Electronics and Information and Technology. The scheme will lead to a total production of more than Rs 10.5 lakh crores over the next five years.

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