PLI scheme to unlock India’s manufacturing capacity and generate jobs

Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing

The domestic electronics hardware manufacturing sector faces a lack of a level playing field vis-à-vis competing nations. The sector suffers disability of around 8.5% to 11% on account of lack of adequate infrastructure, domestic supply chain, and logistics; high cost of finance; inadequate availability of quality power; limited design capabilities and focus on R&D by the industry; and inadequacies in skill development.

The government’s PLI scheme, launched with the aim of incentivizing manufacturing, is estimated to attract a capital expenditure of approximately ?4 trillion for the next five years and has the potential to generate employment for over 3 million in India.

Of the total manufacturing outlay, about 80% is concentrated towards electronics, auto, and solar panel manufacturing of which the focus on semiconductors/electronics value chain is 50% of the outlay. Incentives are based on incremental production/revenue, spread over five years on an average across sectors.

Globally, India’s manufacturing output as a percentage of GDP is comparable with developed economies like the United States, the European Union and developing economies like Russia and Brazil, however, it is way behind China. Massive opportunity emerging for India, as the world looks to diversify away from China and the PLI scheme is a step in the right direction.

The scheme would tremendously boost the electronics manufacturing landscape and establish India at the global level in electronics sector.