The Finance Ministry is considering extension of the Production Linked Incentive (PLI) scheme to about seven additional sectors, including e-bike components, toys, garments, and home accessories (all materials including cotton), high-end smartphone components, furniture, and leather footwear.

“A large part of the funding for the new PLI schemes is expected to come from the unutilised amount for the existing PLIs. But some additional outlays may also be allocated,” an official tracking the matter told businessline.

Reallocation of funds

The budget for the PLI scheme is likely to not be much over the ₹1.97 lakh crore already allocated, as there have been substantial savings under the scheme so far, and they are increasing each year, the source explained. Under the PLI scheme, savings or any unutilized amount can be reallocated to other departments that need funding under the scheme.

The PLI scheme, announced in Budget 2020-21 to create global champions in manufacturing, is so far available for 14 sectors. These include pharmaceutical ingredients, large-scale electronics, medical devices, technology products, pharmaceutical drugs, telecom and networking products, food products, white goods, solar PV modules, auto and auto components, ACC batteries, MMF and technical textiles, specialty steel, and drones.

The scheme offers incentives to companies on incremental sales of products manufactured in India over the base year. They have been specifically designed to boost domestic manufacturing in sunrise and strategic sectors, curb cheaper imports and reduce import bills, improve the cost competitiveness of domestically manufactured goods, and enhance domestic capacity and exports.

PLI for the e-bike sector

“A sector like e-bike components may not appear strategic, but the fact is that India imports about 65 per cent of the components from China. A little support can go a long way in helping us develop our own manufacturing base of components that could give a big boost to the sector,” the official said.

In the textiles sector, the existing PLI scheme covering MMF and technical textiles was allotted ₹10,683 crore for five years. It is expected to use up a little over ₹6,000 crore. The second edition of the PLI scheme for textiles, which is now being planned to cover garments and home textiles made of all materials, including cotton, is likely to benefit from the left-over amount that may go into the total pool.

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