Compliant With World Standards

The Economic Times     10th April 2021     Save    

Context: With Global Supply Chains (GSCs) shifting towards the East and evolving geopolitical dynamics, there is a great opportunity for India to capture certain segments by leveraging its strengths and with dedicated support from Government like the Production-Linked Incentive (PLI) scheme.

Reasons for the poor performance of Indian manufacturing

  • Slow adoption of technologies.
  • Failure to gain an early mover’s advantage.
  • Skewed export basket: 70% of India’s exports are in the traditional segments, for which the world market has shrunk to about 30%.

PLI scheme: A capsule to improve Indian manufacturing -

  • Enhance production: It is expected to generate an incremental production of $520 billion over its predefined timeline of five years.
  • Provide maximum returns: In terms of incremental production, employment generation and exports, due to its clear mandate of selecting only the most eligible sectors that can attract maximum investments.
  • Provide a boost to exports: As it specifically avoids the risk of spreading available resources thinly. (which prevented the Merchandise Exports from India Scheme (MEIS) from providing the expected boost to Indian export)
  • Identifies and supports upcoming technologies: Including advanced chemistry cell batteries, electronic and technology products, and solar photovoltaic modules. 
    • Robust large-scale manufacturing set-ups in these segments are essential for taking on Asian competitors, bringing rural India into the mainstream grid of continuous electricity and high-speed digital connectivity.
  • Generates big-scale employment:  by focusing on the development of labour-intensive sectors such as food processing and textiles.
  • Self-sustaining: The PLI scheme is fully self-sustaining as the benefit is given to the selected company only after investment and production have taken place in India.
    • Beneficiaries have to fulfil certain specified performance parameters, such as minimum investments and minimum incremental production growth.