In recent years, the Indian government has taken significant steps to boost the country’s manufacturing capabilities and promote exports. One of the key initiatives in this regard is the Production Linked Incentive (PLI) schemes. These schemes aim to provide financial incentives to companies in 14 sectors, including pharma, white goods, and electronics, to encourage domestic production and enhance India’s position in the global market.
A Resounding Success
According to official statements released by the Ministry of Commerce and Industry, the PLI schemes have achieved remarkable results since their inception. As of November 2023, a total of 746 applications have been approved under the schemes, signaling a strong interest from companies across various sectors to invest in India’s manufacturing sector.
The approved applications have resulted in over ₹95,000 crore of investment and the establishment of manufacturing units in more than 150 districts across 24 states. This investment has led to a significant boost in production and sales, amounting to ₹7.80 lakh crore. Moreover, the employment generation has been commendable, with over 6.4 lakh individuals finding jobs through these initiatives.
Transforming the Electronics Industry
The PLI schemes have played a crucial role in transforming the electronics industry in India. The statement by the commerce and industry ministry highlights the achievements in mobile manufacturing, where a value addition of 20% has been observed within a span of three years. In 2022-23, smartphones constituted ₹44 billion of the total electronics production, including ₹11.1 billion worth of exports.
Furthermore, the telecom sector has achieved a remarkable 60% import substitution, making India almost self-reliant in the production of Antennae, GPON, and CPE. This achievement has not only reduced dependence on imports but has also bolstered the country’s technological capabilities.
Empowering the Pharma Sector
The PLI schemes have also had a significant impact on the pharmaceutical industry. India has witnessed a reduction in the import of raw materials, thanks to the manufacturing of unique intermediate materials and bulk drugs within the country. The production of critical drugs like Penicillin-G has been established, and technology transfer has facilitated the manufacturing of medical devices such as CT scan and MRI machines.
Revitalizing the White Goods Sector
Another sector that has witnessed a positive transformation under the PLI schemes is the white goods industry. The government’s focus on promoting domestic manufacturing of air conditioner and LED light components has attracted 64 companies to invest in these areas. These investments, amounting to ₹5,429 crore for air conditioner components and ₹1,337 crore for LED component manufacturing, are expected to create an additional direct employment opportunity for about 48,000 people.
Boosting Startups and Innovation
In addition to the manufacturing sector, the PLI schemes have also had a positive impact on startups and innovation in India. The government has recognized over 1,14,000 startups, contributing to the creation of more than 12 lakh jobs. The Fund of Funds for Startups (FFS) has invested a substantial amount of ₹17,272 crore in 915 startups, fostering a culture of innovation and entrepreneurship.
To further support startups, the Credit Guarantee Scheme for Startups (CGSS) was operationalized in April 2023. This scheme aims to provide financial support and ease the process of obtaining credit for startups, enabling them to scale and grow their businesses.
Digitization and E-commerce
The PLI schemes have also played a vital role in promoting digitization and e-commerce in India. The Open Network for Digital Commerce (ONDC) has emerged as a game-changer, facilitating seamless digital transactions. With over 2.3 lakh sellers and service providers across 500+ cities, the ONDC recorded more than 6.3 million transactions in November 2023 alone.
The success of the ONDC was further highlighted by the pilot for exports, where Singapore became the first market to purchase products through the ONDC network. This achievement demonstrates the potential of digital platforms in expanding India’s global trade.
Promoting Local Craftsmanship
The PLI schemes have also focused on promoting local craftsmanship and boosting regional economies. The “One District One Product” (ODOP) initiative has identified over 1,200 unique products across 767 districts, showcasing the rich diversity and skills of local artisans. This initiative has the potential to revitalize traditional industries and create employment opportunities at the grassroots level.
To support the promotion and sale of region-specific products, the government has approved the establishment of Unity Malls in 17 states. With an investment of ₹2944 crore, these malls will provide a platform for local artisans and entrepreneurs to showcase their products and contribute to economic growth.
Simplifying Business Processes
The Indian government has been actively working towards simplifying business processes and improving the ease of doing business in the country. Several initiatives have been implemented under the PLI schemes to streamline regulatory processes and reduce compliance burdens.
Decriminalization of over 3,600 compliances and the reduction of an additional 41,000 compliances have been key achievements in this regard. The Jan Vishwas (Amendment of Provisions) Bill, 2023, received parliamentary approval, aiming to decriminalize 183 provisions across 42 Central Acts. These measures demonstrate the government’s commitment to creating a business-friendly environment.
Infrastructure Development and Logistics
The PLI schemes have also contributed to infrastructure development and logistics in India. The ambitious PM GatiShakti National Master Plan has examined 123 major infrastructure projects worth ₹12.08 lakh crores. The integration of data layers from 39 Central Ministries and 36 States/UTs showcases a collaborative approach towards infrastructure development.
The Unified Logistics Interface Platform (ULIP) has emerged as a linchpin in enhancing supply chain visibility. With integration completed across 35 systems of 08 different Ministries, ULIP has gained the confidence of over 125 private companies, as reflected in the signing of Non-Disclosure Agreements (NDAs). This platform has the potential to revolutionize logistics and enable seamless trade across the country.
Industrial Growth and Foreign Direct Investment
India’s industrial performance, as measured by the Index of Industrial Production (IIP), has shown robust growth, expanding by 6.9% during Apr-Oct 2023-24. This growth reflects the resilience and strength of the Indian manufacturing sector.
The foreign direct investment (FDI) landscape in India has remained vibrant, with FDI inflow standing at USD 71 billion in FY 2022-23. Notably, the FDI equity inflow in manufacturing sectors has increased by 55% over the last nine financial years, indicating the growing confidence of international investors in India’s manufacturing capabilities.
Fostering Innovation and Research
India’s commitment to fostering innovation and research is evident in its achievements in intellectual property rights (IPR). The country has retained the 40th rank in the Global Innovation Index 2023, showcasing its prowess in the field of innovation.
The number of patents granted in India has witnessed significant growth, increasing eight-fold from 5978 in 2014-15 to 47735 in 2023-24 (up to November 30, 2023). This surge in patents granted reflects the government’s efforts to promote a culture of innovation and research in the country.
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