New Delhi, Mar 3 (KNN) The central government is evaluating an expansion of the Production-Linked Incentive (PLI) scheme by linking incentives to additional performance metrics beyond incremental sales.
According to sources cited by The Indian Express, discussions at the inter-ministerial level suggest that metrics such as domestic value addition and incremental exports could be incorporated into the scheme’s framework. However, no final decision has been made.
Since its launch in April 2020, the PLI scheme has covered 14 sectors, attracting both original equipment manufacturers (OEMs) and contract manufacturers to boost India’s manufacturing landscape.
The first phase of the scheme has been largely successful in shifting the focus towards domestic production, but officials acknowledge that percentage value addition remains in single digits in key sectors.
A major area of concern is electronics manufacturing, which plays a critical role in strengthening India’s industrial ecosystem.
A renewed push for localisation is being considered to enhance value capture by domestic producers, improve competitiveness against Chinese manufacturers, and provide greater bargaining power in global supply chains.
Experts argue that large-volume manufacturing is necessary to incentivize the relocation of supply chains, particularly for components and sub-components.
Additionally, India’s relatively small market for telecom and electronics makes access to export markets essential for scaling up manufacturing efforts. As a result, some policymakers are proposing exports as a key metric for PLI expansion.
Challenges remain, particularly the limited scale of domestic firms and their lack of foreign market access, making them less competitive against Chinese and Vietnamese counterparts.
The government is also looking to attract foreign OEMs to accelerate domestic capabilities, following the successful models of Japan, South Korea, and China.
The PLI scheme’s impact on job creation has been mixed, with sectors such as mobile phones, food processing, and pharmaceuticals performing well, while others like textiles and advanced chemical cells have fallen short of targets.
The proposed refinements to the PLI scheme aim to address these gaps and further strengthen India’s manufacturing sector.
(KNN Bureau)
