A
meaningful change in India's industrial policy, the ProductionLinked Incentive
(PLI) schemes are the latest additions to the game-changing reforms that have
been introduced under the aegis of the 'AatmaNirbhar Bharat Abhiyan'
(Self-Reliant India movement) launched by Prime Minister Narendra Modi.
The
idea behind the scheme is to offer companies incentives on incremental sales
from products manufactured in India, over the base year. The scheme also
invites foreign companies to set up units in India alongside encouraging local
companies to set up or expand existing manufacturing units, generate more
employment and cut down the country's reliance on imports. It will also have
beneficial spill-over effects via the creation of a big supplier base for the
anchor units established under the scheme.
In
the Union Budget 2021-22, the Finance Minister announced an outlay of Rs. 1.97
lakh crore (~USD 26 Bn) for the PLI schemes for 13 key sectors which have been
shortlisted on the basis of their potential for revenue and employment
generation. The scheme also intends to generate large-scale employment by
incentivising the development of traditional, labour-intensive sectors such as
food processing and textiles.
Covering
key employment generating sectors of ESDM, automobiles, pharmaceuticals,
telecommunications, textiles, food products, renewable energy, white goods and
steel, the scheme envisages to provide an average 5% of the production value as
an incentive. This implies that the minimum production in the country as an
outcome of the PLI schemes stands to be around Rs. 3.92 lakh crore (~USD 500
Bn) in the next five years, as per reports by NITI Aayog.
This
massive boost in production has the potential to create nearly 1.40 crore
man-months' worth of jobs directly from 2021-22, which translates to
effectively doubling the existing workforce across sectors. With the inclusion
of the suppliers and vendors of the manufacturing companies benefitting from
the PLI scheme, a total of 4.20 crore man-months of jobs are set to be
generated, as per the data by Indian Staffing Federation.
While
making domestic manufacturing globally competitive, boosting exports and
creating global champions across strategic sectors, the biggest takeaway of the
scheme lies in its potential to generate employment. Even while defining each
sector's expected outcomes, employment shares the stage with parameters like
increase in investment, production and exports.
The
most exemplary example of the PLI scheme's success in transforming the domestic
manufacturing landscape of a specific sector can be seen in the largescale
electronics manufacturing domain, where, within a few months of the scheme's
launch, the 16 approved companies produced goods worth nearly Rs. 35,000 crore,
invested nearly Rs. 1,300 crore and are set to create around 22,000 jobs, under
the scheme.
At
the outset of the PLI schemes, mobile manufacturing and specified electronic
components has pegged its expected direct employment of nearly 2 lakh and an
additional indirect employment of nearly 3 times the direct employment in next
five years. A similar major feat has been achieved by the medical devices
sector, where 14 applications have been approved by the government with a total
committed investment of Rs. 873.93 crore and expected employment generation of
about 4,212 out of the larger goal of creating additional employment of 33,750
jobs over a period of five year.
The
success of the PLI in large-scale manufacturing sets the perfect precedent for
the pharmaceutical industry to witness similar growth and expand its domestic
manufacturing capacities. For starting materials/drug intermediaries and active
pharmaceutical ingredients, approvals have been accorded to 16 applicants which
have committed a total investment of Rs. 348.70 crore and employment generation
of about 3,042 out of the proposed target of creating 12,140 overall jobs.
In
November 2020, the Union Cabinet has given its approval to introduce the PLI
Scheme in the 10 key sectors of Advance Chemistry Cell (ACC) Battery,
Electronic/ Technology Products, Automobiles & Auto Components,
Pharmaceuticals drugs, Telecom & Networking Products, Textile Products,
Food Products, High Efficiency Solar PV Modules, White Goods (Air Conditioners
and LED Lights) and Specialty Steel.
As
per government estimates, the PLI scheme is expected to yield employment
creation, starting from the next financial year—1.80 lakh employment
opportunities for manufacturing electronic/ technology products, one lakh jobs
for manufacturing pharmaceuticals drugs, 2.5 lakh persons for segments of food
for which the PLI has been announced, four lakh direct and indirect employment
opportunities for the white goods sector; and direct employment of about 30,000
and indirect employment of about 1.2 lakh persons in the entire solar PV
manufacturing ecosystem.
As
per the Indian Staffing Federation, 14,07,778 jobs will be created in Advance
Chemistry Cell (ACC) Battery, 3,88,889 jobs in ESDM, 44,36,600 in manufacturing
of automobiles and its components, 11,66,667 in production of pharmaceuticals
drugs, 9,48,500 in telecom and networking products, 8,30,900 for manufacturing
textile and 8,47,778 for food products, 3,50,000 in solar PV modules, 4,85,178
in white goods (specifically air conditioners and LED Lights) and 4,91,711 jobs
for manufacturing specialty steel. The grand total direct and collateral job
surge expected has been pegged at 1,13,54,000 and 3,40,62,000 respectively, by
the Indian Staffing Federation.
The
PLI scheme is expected to have a cascading effect, having a lasting impact on
MSMEs (Micro, Small and Medium Enterprises). Along with the anchor units,
supplier units will also help generate massive primary and secondary employment
opportunities. Moreover, the specific product lines identified in each of the
10 sectors is based on having high growth potential and capabilities to
generate medium- to large-scale employment.
As
the detailed guidelines of each sector under PLI are being released and a
roadmap for its effective implementation being drawn, the coming five years
will witness a sharp yet meaningful turn in its larger industrial policy. The
new progrowth template for India's industrial policy contains all essential
parameters to make India a manufacturing hub and transform its huge population
into productive workforce.