India to provide incentives worth $2 bn towards local manufacturing sectors
Workers stitch garments at a factory of an apparel shop
The Indian government is looking to provide incentives worth 180 million rupees ($2.2 billion) to stimulate local manufacturing. According government officials who spoke to Reuters, the incentives will support six new industries including chemicals, shipping containers and material for vaccines.
The offer is a component of the nation's 1.97 trillion rupee production-linked incentive scheme (PLI), which was launched in 2020 and targets 14 industries, from drones to electrical items, but it has been successful only in limited sectors.
As only a small portion of the PLI incentives have been utilised until now, the government has decided to transfer leftover funds to new industries.
According to the two government officials in contact with Reuters, limited expenses under the system might result in "large" savings that could be applied to new industries.
Toys, bicycles, leather, and footwear are among the additional six industries that could join the PLI programme, according to the officials. According to them, these sectors will split the 180 billion rupee portion that is being taken from the scheme's initial budget.
India believes that the PLI scheme will be essential to strengthen the country's overall economy, which has been suffering from a lack of private investment for almost ten years and is having difficulty producing enough jobs, specifically in the manufacturing sector.
In the fiscal year that concluded in March, incentives worth a combined total of roughly 29 billion rupees were given out. According to a government assessment seen by Reuters, little has been paid to companies in industries including specialty steel products, solar modules, and automobile components.
One of the two officials told Reuters, that as per government reports, the payouts might increase to nearly 110 billion rupees in the current fiscal year and to 400 billion rupees by the fiscal year 2024/25.
The official further told Reuters that “the disbursements should be better than this estimate after some tweaks to the scheme,” adding that these adjustments will assist in speeding up the payouts and some industries may get an extra year or two under the scheme.
(With inputs from Reuters)
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