India to review production incentive scheme

Negotiations are said to be in a ‘reasonably advanced stage’ to bring footwear producers into the arrangement.

The Indian government’s trade ministry is to re-appraise its ‘production-linked incentive’ (PLI) scheme, in order to improve its use in a number of important sectors – including those which have so far not taken full advantage of this benefit. The PLI scheme, which is a major industrial policy introduced by prime minister Narendra Modi, has to date announced incentives for 14 sectors. It was designed to give companies incentives on incremental sales from products manufactured in domestic operations. The PLI scheme is aimed at boosting the manufacturing sector and to reduce imports.

The review will focus on six sectors, including steel and textiles, where the scheme has not proved to be effective, and it is hoped that this evaluation will help in the better utilisation of funds over the next two to three years. According to a government official, talks are in a ‘reasonably advanced stage’ to also bring producers of footwear, toys and ‘new-age’ cycles into the arrangement. The PLI scheme is said to have produced investments totalling USD 6.54 billion up to December 2022.

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This article was originally published on page 4 of the June 2023 issue of SATRA Bulletin.

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