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At a time when India is keen to play a bigger role in the global value chain, the Economic Survey 2022-23 has pitched for a dedicated government policy to support domestic industrialisation.
It added that India has a unique opportunity to become a global manufacturing hub “this decade” by leveraging on significant domestic demand, government’s Make-In-India focus and country’s large proportion of young workforce.
“The need for a dedicated government policy to support domestic industrialisation amidst foreign competition can be better appreciated from the industrialisation experiences of East Asian countries such as South Korea and Taiwan in 1960-1990. These countries supported their domestic industries during their high growth phase, while also ensuring healthy competition required for the industries to grow,” the survey noted.
New industrial policy
The Department for Promotion of Industry and Internal Trade (DPIIT) is already in the process of giving final touches to a New Industrial Policy which will focus on promoting competitiveness, uniform standards, economic integration and innovation and entrepreneurship.
To further enhance India’s integration in the global value chain, the survey pointed out that ‘Make in India 2.0’ initiative is focusing on 27 sectors. Efforts are also on to grow nearly 24 sub-sectors such as furniture, electronics, ceramics, ready-to-eat, medical devices, drones, toys, sports goods and textile among others in a holistic and coordinated manner.
PLI scheme
The government’s production-linked incentive scheme is expected to attract a capex of approximately ₹3-lakh crore over the next five years, generate 60 lakh jobs and increase the share of the manufacturing sector in total capital formation. Sectors under which the PLI scheme has been announced currently constitute around 40 per cent of the total imports. “The scheme, spread across 14 sectors, can enhance India’s annual manufacturing capex by 15 to 20 per cent from FY23,” the survey noted. As of December-end, 717 applications of PLI beneficiaries including over 100 MSMEs have been approved.
“As per recent reporting from implementing Ministries/ Departments, around ₹47,500 crore of actual investment has been made; production/ sales of ₹3.85 lakh crore of eligible products and employment generation of around 3 lakh has been reported and 106 per cent achievement of actual investment reported versus the corresponding projections of FY22,” it added.
Semiconductors
To attract investments to develop a semiconductor manufacturing ecosystem, India announced a comprehensive programme with an outlay of ₹76,000 crore in September last year.
“While these are early stages, global and domestic players have evinced interest based on the prospects for the semiconductor industry in India and the fiscal incentives provided,” the survey said. Tata and Vedanta have announced plans to establish semiconductor fabs while Israel-based International Semiconductor Consortium plans to ₹ 22,900 crore in Karnataka to set up India’s first chip-making plant.
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