PLI schemes for automobile and electronic sectors get a major push

2024-25.

The PLI scheme for automobiles and auto components saw a 620 per cent jump in allocation to Rs 3,500 crore in the Budget Estimate (BE) 2024-25 compared to Rs 484 crore as per the Revised Estimate (RE) 2023-24.

This comes after the scheme attracted a proposed investment of `67,690 crore, against which `14,043 crore that has been invested till end-March 2024, as per the Economic Survey 2023-24. Applicants have proposed employment generation of 1.48 lakh, against which 28,884 of employment has been generated, the Survey added.

A substantial hike of 37 per cent was announced for PLI schemes under the Ministry of Electronics and Information Technology (MeiTY) — from `4,500 crore to `6,200 crore. The PLI for mobile phones under MeitY has been driving manufacturing and exports in the segment and the ministry is now looking to replicate the same model in production of laptops and semiconductors. Moreover, the budgetary allocation for Research and Development (R&D) in the IT and electronic sector has also been increased from `1,000 crore to `1,148 crore.

However, amid concerns of leakage, allocation for the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME) scheme has been reduced by 44 per cent to `2,651 crore from `4,807 crore. This comes after an investigation by the heavy industries ministry revealed that these companies have availed fiscal incentives under the scheme by violating norms.

The central government reportedly sought `469 crore from seven electric two-wheeler makers, including Hero Electric and Okinawa, for claiming incentives while not complying with the FAME II scheme norms.

Ahead of the Budget presentation, the Indian industry had sought a widening of the PLI scheme to labour-intensive sectors such as textiles and leather sectors as they have been witnessing a decline in exports due to adverse global demand in the West.

A renewed push in these sectors comes as the Economic Survey concluded that the evidence of India’s enhanced global supply chain participation is reflected in increased investment by foreign firms in electronics, apparel and toys, automobiles and components, capital goods and semiconductor manufacturing in India.

The Survey stated that India’s large domestic consumer market is an added attraction for firms setting up shop here as firms such as Apple assembled 14 per cent of its global iPhones in India in FY24 and Foxconn invested in the states of Karnataka and Tamil Nadu to set up new manufacturing plants for components.