The upcoming Union Budget is anticipated to expand the scope of the production-linked incentive (PLI) schemes, incorporating new categories such as toys, footwear, textiles, and millet-based foods. This move comes in response to growing demands from various industry sectors and government departments.
Current PLI Scheme Coverage
Currently, the PLI schemes cover 14 sectors, including mobiles, drones, telecom, textiles, automobiles, white goods, and pharmaceuticals. These initiatives aim to bolster domestic manufacturing, reduce reliance on imports, and create employment opportunities.
Focus on Labour-Intensive Sectors
The new PLI schemes are expected to particularly benefit labour-intensive sectors. During pre-budget discussions with Finance Minister Nirmala Sitharaman, industry representatives emphasised the importance of expanding these schemes to include more sectors. The PHD Chamber of Commerce and Industry specifically highlighted the need for schemes in sectors like leather, gems and jewellery, medicinal plants, and handicrafts. Meanwhile, the Confederation of Indian Industry (CII) proposed an employment-linked incentive scheme for sectors with significant growth potential and high labour demands, such as toys, textiles and apparel, tourism, logistics, and small retail.
Proposed Allocations and Funding
In the Interim Budget of February, the Department for Promotion of Industry and Internal Trade (DPIIT) proposed allocating Rs 3,489 crore for a PLI scheme for toys and Rs 2,600 crore for leather and footwear. However, these allocations were pending approval from the Union Cabinet and were provisioned only for the financial year 2025. According to the Interim Budget document, entities already benefiting from any other PLI scheme would not be eligible for the same product under the new schemes.
Evaluating Current Schemes Before Expansion
Over the past year, there has been significant advocacy from various government departments for additional PLI schemes. Nonetheless, some officials have suggested that any new schemes should be introduced only after thoroughly evaluating the effectiveness of the current ones.
Efficient Utilisation of Existing Funds
The introduction of the new PLI schemes will not require additional fund approvals. The Centre had already earmarked Rs 1.97 trillion for the 14 PLI schemes three years ago. However, approximately Rs 41,000 crore of this amount remains unspent. This unutilised fund, resulting from under subscription and tepid responses to certain schemes, such as those for textiles, bulk drugs, and white goods, could be redirected to other government departments in need of funds for the new PLI schemes. This flexibility is built into the design of the PLI scheme to ensure efficient use of resources.
The forthcoming Union Budget’s expansion of PLI schemes to include new categories is a strategic move to boost domestic manufacturing, reduce import dependence, and create more job opportunities. By efficiently utilising existing funds and focusing on labour-intensive sectors, the government aims to drive economic growth and enhance the country’s manufacturing capabilities.
