The flagship Production Linked Incentive (PLI) scheme was introduced on March 21, 2020, to boost production, increase exports and curb imports. An outlay of ₹1.97-lakh crore for 14 sectors, including automobile, telecom and textile, was sanctioned for release over an extended period. More than half of the scheme’s five-year period is over. It is time, therefore, to look at the effectiveness of the scheme.

National Accounts Statistics show that manufacturing value added was 17.3 per cent of gross value added (GVA) in FY15, which increased slightly to 17.7 per cent in FY23. At this rate, manufacturing is not driving economic growth in any significant way. As for the promise that the scheme will create six million new jobs in five years, there are hardly any reliable indicators on how many jobs have been created.

After more than three years, a recent PLI review by the Ministry of Commerce and Industry shows that of the ₹1.97-crore allocation, only ₹2,900 crore (1.5 per cent) was disbursed by end-FY23 and that too only to eight sectors. Bulk of the incentives went to three sectors — large-scale electronics, pharmaceuticals and food products. There were no disbursements to steel, textiles, batteries, white goods, solar panels and automotive.

Following the review, the Department of Promotion of Industry and Internal Trade (DPIIT), under the Commerce and Industry Ministry, said: “India’s flagship PLIs have attracted investments worth ₹62,500 crore in sectors such as mobile manufacturing, pharmaceuticals, medical devices and food processing, resulting in incremental production/sales of over ₹6.75-lakh crore; creating 3.25 million new jobs and increasing exports by ₹2.56-lakh crore by March 2023.”

The statement also said that “sectors for which the PLI scheme exists have seen increased FDI inflows between FY22 and FY23.

Ideally, PLI should promote ‘Made in India’, not ‘Assembled in India’. In its 2021-22 annual report, the NITI Aayog said it was developing a dashboard to monitor the PLI scheme. Since the PLI is intended to boost investments, production, exports and employment generation, the dashboard was meant to track changes in these areas. However, the dashboard is still not available.

Though the objective of the PLI scheme of improving competitiveness is welcome, exports should be enhanced by utilising local, and not imported, resources. This will result in better pay-offs. To strengthen India’s manufacturing capacity and reduce import dependency in key sectors, the implementation of the scheme should be fine-tuned. This could pave the way for a self-sustaining manufacturing ecosystem.

The writer is Vice-Chairman, Punjab Economic Policy and Planning Board. Views are personal

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