The government on Wednesday approved a Rs 2 lakh crore production-linked incentive (PLI) package to boost domestic manufacturing in identified sectors, and launched a Rs 8,100-crore viability gap funding (VGF) scheme to encourage private participation in social infrastructure such as water supply and solid waste management.
“Today, the [Narendra] Modi government has decided to give about Rs 2 lakh crore production-linked incentives to 10 key manufacturing sectors to raise production, boost exports and create jobs. This decision will be of importance in realising Atmanirbhar Bharat [Self-reliant India],” information and broadcasting minister Prakash Javadekar told reporters after a Cabinet meeting.
The purpose of the PLI scheme is to make the country a global manufacturing hub, he said, adding that the second VGF decision will usher in public-private partnership (PPP) in the social infrastructure sector.
Speaking about the two schemes, finance minister Nirmala Sitharaman said: “Both are going to give the right impetus to the economy because we are looking at — one, atmanirbharta (self-reliance); two, making sure that India will be a part of the global value chain; and three, ensuring that critical sunrise sectors get the necessary support from the government so that we are able to build an India, which is strong enough to service its own domestic market but also making sure we are able to link up with the global value chain.”
The production-linked incentives cheme for the 10 sectors announced on Wednesday involves incentives worth Rs 1,45,980 crore in the next five years in addition to Rs 51,311 crore package under implementation for mobile manufacturing and specified electronic components (Rs 40,951 crore), drug intermediaries and active pharmaceutical ingredients (APIs) worth Rs 6,940 crore, and manufacturing of medical devices (Rs 3,420 crore).
Funds allocated for the 10 newly identified sectors are advance chemistry cell battery (Rs 18,100 crore), electronic/technology products (Rs 5,000 crore), automobiles and auto components (Rs 57,042 crore), pharmaceutical drugs (Rs 15,000 crore), telecom and networking products (Rs 12,195 crore), textile products (Rs 10,683 crore), food products (Rs 10,900 crore), high efficiency solar PV modules (Rs 4,500 core), white goods (Rs 6,238 crore), and speciality steel (Rs 6,322 crore).
The production-linked incentive scheme will be implemented by the concerned ministries or departments within the overall financial limits prescribed, the finance minister said.
Sitharaman said the VGF scheme has been already working in the economic and core infrastructure sector, and now it is revamped to include incentives for private investments in social infrastructure.
Prime Minister Narendra Modi said the Cabinet decision will boost manufacturing, give opportunities to youth and make India a preferred investment destination. “This is an important step towards improving our competitiveness & realising an Aatmanirbhar Bharat,” he tweeted.
The schemes are the latest moves by the government to attract investments and boost the economy that has been battered because of the Covid-19 pandemic.
Wednesday’s decision is also timed before an imminent stimulus package. Sitharaman said on October 19 that the government, which has started a mid-year review of the economy, is open to offering another stimulus package after demands from various quarters and industry bodies.
Uday Kotak, president, Confederation of Indian Industry (CII), said that the PLI scheme “sets a new era for Make in India” and the policy is “transformational and timely” to make India a global manufacturing hub.
