PLI Scheme to Account for 13-15% CAPEX

The Production Linked Incentive (PLI) scheme will account for 13-15% of the annual average investment spending in vital industrial sectors over the next three to four years, as per a report by Crisil.

The government had announced the PLI scheme in 15 sectors since its introduction in March 2020, involving incentives of about Rs.1.93 lakh crore, of which 50-60% will be spent on domestic manufacturing and export focus sectors while the remaining on import localisation.

PLI Scheme and CAPEX 

The rating agency, Crisil, stated in its report released on Wednesday that implementing the PLI scheme will result in potential Capital Expenditure (CAPEX) of Rs.2.5-3 lakh crore over the scheme period.

The PLI scheme assures a rapid on-the-ground execution, with around 60% of the CAPEX already approved and significant spending set to occur over FY23-FY26. The report said that the CAPEX had been approved for ten sectors.

Crisil also stated that while the CAPEX in pharma, mobile and telecom has already kicked off, capital-intensive sectors such as solar photovoltaics and automobile, which form 70% of the committed investment, will begin from April 2022. So far, over 900 players across sectors have shown interest in the PLI scheme, of which 350 have got approval.

PLI Scheme to Increase Green Investments and Exports

The Crisil Director, Hetal Gandhi, stated that the PLI scheme would spur green investments in India. There is an expectation that about 55% of the scheme will be green in sectors like fuel cell electric vehicles/electric vehicles and solar photovoltaics.

The Crisil report said that the PLI scheme would aid exports too with the supply-chain integration. Out of 15 sectors, nine sectors have export potential, ranging from 20-80% of the incremental revenue generated, which can create an annual export potential of Rs.2 lakh crore or 6% of the total exports of the calendar year 2021.

Crisil said that sectors that could benefit from exports include pharma, mobiles, IT hardware, food processing, speciality steel, and white goods.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in

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