PLI Schemes Drive 76 Per Cent Surge in Manufacturing Sector FDI: Govt

The Production Linked Incentive (PLI) schemes implemented by the Central government have resulted in a significant increase in production, employment generation, economic growth, and exports across the country, according to Rajesh Kumar Singh, Secretary of the Department for Promotion of Industry and Internal Trade (DPIIT).

Speaking at a press conference in New Delhi on Tuesday (13 June), Singh highlighted that the PLI schemes contributed to a notable 76 per cent rise in Foreign Direct Investment (FDI) in the manufacturing sector during the fiscal year 2021-22, with an inflow of $21.34 billion compared to $12.09 billion in the previous fiscal year.

The PLI schemes has been implemented by the Central government to strengthen the production capabilities of 14 sectors.

These schemes involve an incentive outlay of Rs 1.97 lakh crore (~$ 26 billion) and support the creation of global champions in these sectors.

Sectors such as Drugs and Pharmaceuticals (46 per cent increase in FDI), Food Processing Industries (26 per cent increase), and Medical Appliances (91 per cent increase) have witnessed a growth in FDI inflows due to the PLI schemes.

This has led to a transformation in India's export portfolio, with a shift from traditional commodities to high-value-added products such as electronics, telecommunication goods, and processed food products, according to a Commerce Ministry release.

To date, 733 applications have been approved across the 14 sectors, with an expected investment of Rs 3.65 lakh crore.

Among the beneficiaries of the PLI schemes, 176 micro, small, and medium enterprises (MSMEs) operate in sectors including bulk drugs, medical devices, pharma, telecom, white goods, food processing, textiles, and drones.

As of March 2023, Rs 62,500 crore has been invested under the PLI schemes, leading to incremental production/sales of over Rs 6.75 lakh crore and the generation of around 325,000 jobs.

Additionally, exports have received a boost of Rs 2.56 lakh crore by the fiscal year 2022-23 due to the schemes.

In the fiscal year 2022-23, around Rs 2,900 crore in incentives were disbursed under the PLI Schemes across eight sectors: Large-Scale Electronics Manufacturing (LSEM), IT Hardware, Bulk Drugs, Medical Devices, Pharmaceuticals, Telecom & Networking Products, Food Processing, and Drones and Drone Components.

According to the Commerce Ministry, the PLI Scheme has facilitated the relocation of major smartphone companies, including Foxconn, Wistron, and Pegatron, and their suppliers to India, resulting in the manufacturing of top-tier high-end phones within the country.

This development has also led to a 20-fold increase in women's employment and localisation in the IT Hardware sector, particularly in battery and laptop manufacturing.

Secretary Singh emphasised that India has achieved a value addition of 20 per cent in mobile manufacturing within three years, surpassing the progress of countries like Vietnam and China over longer periods.

"We have been able to increase the value addition in mobile manufacturing to 20% within a period of 3 years whereas countries like Vietnam achieved 18% value addition over 15 years and China achieved 49% value addition in over 25 years. Seen in this perspective, it is a big achievement”, Singh said.

Further, PLI Scheme for LSEM along with existing Phased Manufacturing Program (PMP) has led to increased value addition in the electronics sector and in smartphone manufacturing, 23 per cent and 20 per cent respectively, from negligible in 2014-15. Of the $101 Billion total electronics production in FY 2022-23, smartphones constitute $44 Billion including $11.1 billion as exports.

Importantly, the PLI Scheme has contributed to import substitution, with the Telecom sector achieving 60 per cent self-reliance in products such as Antennae, GPON (Gigabit Passive Optical Network), and CPE (Customer Premises Equipment).

The Drones sector has experienced a sevenfold increase in turnover, primarily driven by MSME startups, due to the PLI scheme, the ministry said.

Under the PLI Scheme for Food Processing, there has been a significant increase in the sourcing of raw materials from India, benefiting Indian farmers and MSMEs by boosting their income, it added.

Moreover, the PLI Scheme has led to a reduction in raw material imports in the Pharma sector.

Unique intermediate materials and bulk drugs are being manufactured in India including Penicillin-G, and transfer of technology has happened in manufacturing of Medical Devices such as (CT scan, MRI etc.), according to the ministry.