PLI Schemes To Remain In Demand; FY24 Will Prove Success of Scheme: Economists

BQ Prime awaits response from the Department for Promotion of Industry and Internal Trade on emailed an query seeking updated PLI investment numbers.

The extent of private investment in a sector is also heavily dependent on prevailing business conditions and geopolitical tensions.

The idea behind the scheme is to replace imports and become self-sufficient wherever “we can, but there are still some raw materials and components that need to be sourced outside India”, Ahuja explained.

“Raw materials like lithium and iridium need to be sourced for manufacturing ACC batteries. Similarly, semiconductor production needs the requisite infrastructure and state government assurances to begin, which need to be arranged for,” he said.

Saurabh Kanchan, Tax Partner at Deloitte, said PLI is well-designed but need fine-tuning.

“We will need data like investment commitments made and quarterly performance reviews to actually see how the growth has been post-PLI,” Kanchan said. “Anecdotal evidence tells us the scheme hasn’t yet spurred action for localised manufacturing where there wasn’t already existing investment interest. It has helped sectors where investment was already on the cusp of taking off, like food products.”

According to Kanchan, reporting of investment progress, less stringent localisation norms, not having solely sales growth-based incentives, and having a longer window of application will encourage bigger companies to also consider participating.

Demands for PLI expansion have been across sectors like bicycles, toys, compressed biogas producers, leather and footwear, critical intermediaries of chemicals, power transmission equipment, grid-level energy storage, electrolysers, furniture, vaccine materials, and shipping containers to boost domestic manufacturing, investments, and export.