PLI scheme will provide new opportunities for manufacturing sector, employment will be available on a large scale: Report

The main goal of the PLI scheme is to make the country a leader in the manufacturing sector and to generate new employment, along with increasing production, reducing imports and increasing exports.

New opportunities for manufacturing sector from PLI scheme

Rating agency Icra said on Thursday that the government’s ambitious production-based incentives ,production-linked incentive) Planning Manufacturing Sector of the country (manufacturing sector) capacity to new heights and with this the plan will increase capital expenditure (capital expenditure) will help in attracting around Rs 4 lakh crore. With a view to increase production and employment, reduce import burden and boost export growth in the country, the PLI scheme covers strategically important sectors that are witnessing steady growth in demand, including solar, semiconductor, Electronics, Automobiles etc. and which are important for the development of manufacturing capabilities of the country

Capital expenditure of Rs 4 lakh crore possible in next 5 years

Rohit Ahuja, Head of Research and Outreach, ICRA, said, “At present, manufacturing capex accounts for about 20-25 per cent of the total capital expenditure in India. It is estimated that the PLI scheme launched with an aim to encourage manufacturing may attract a capital expenditure of about Rs 4 lakh crore in the next five years”. Icra said that this scheme has the potential to generate employment for lakhs (skilled and unskilled workers) in India. In addition, incremental revenue of Rs 35-40 lakh crore is expected in the next five years due to reduction in net imports. The sectors under which the PLI scheme has been announced currently account for 40 per cent of the total imports. “The scheme, spread across 14 sectors, can increase India’s annual manufacturing capital expenditure by 15 to 20 percent from FY23. However, delay in plans, increase in credit cost, availability of requisite infrastructure and delay in approvals could be some of the potential challenges,” Ahuja said. Out of the total manufacturing outlay, around 80 per cent is focused on electronics, auto, solar panel manufacturing, of which 50 per cent is also on semiconductor and electronics value chain

what is the government’s plan

The PLI for semiconductor manufacturing is Rs 76,000 crore, and aims to make India one of the leading manufacturers globally in this critical component. Auto and electronics production has been affected globally due to semiconductor chip shortage. These chips are important parts used in automobiles and electronic items like mobile phones, smartphones, televisions, washing machines, refrigerators etc. “Given the fact that India’s dependence on semiconductors is expected to increase substantially, this PLI scheme is significant,” Icra said. For automobiles, the cabinet has approved Rs 25,900 crore (out of Rs 57,000 crore). Additionally, the PLI for ACC Battery is estimated at Rs 18,100 crore. The PLI allocation for solar PV modules has been increased to Rs 24,000 crore. An outlay of Rs 24,900 crore has been made for pharma, Rs 12,200 crore for telecom, Rs 10,900 crore for food processing, Rs 10,700 crore for textile exports. Rs 6,300 crore is for specialty steel and Rs 120 crore for the drone segment.

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