Centre plans to revamp PLI schemes to boost MSME sector

NEW DELHI — The government is planning to revamp the production-linked incentives (PLIs) by relaxing the norms for releasing funds, including more sectors under the scheme, and extending benefits to MSMEs (micro, small and medium enterprises) in labour-intensive sectors through special carve-outs, media reports have said.

The restructuring would also include incentives for research & development (R&D) to create a manufacturing ecosystem.

According to the reports, the government has begun accepting applications for the release of incentives on a quarterly basis, compared to the earlier norm of annual releases of the funds.

Toys, furniture and apparel will be among the new areas covered under the scheme soon. These sectors were chosen because of their potential to create jobs.

Moreover, the government may expand the scope of the PLI scheme for man-made fibre (MMF) and technical textiles to cover certain cotton-based apparel as well. Announcements regarding this expansion are expected in the upcoming budget.

The only exceptions to quarterly disbursements will be cases where the amounts are small, and departments will find it difficult to comply. The PLI for food processing is one such scheme, the reports mentioned.

The total outlay for the PLI scheme is INR 1.97 lakh crore (over $26 billion), of which only INR 9,700 crore has been disbursed by March 2024. In FY24, incentives totalling Rs 6,800 crore were provided across various sectors.

As of December 2023, around Rs 1.07 lakh crore has been invested by PLI companies. These investments have generated incremental sales of over Rs 9 lakh crore and the creation of 7 lakh jobs.

The PLI scheme was initially launched in March 2020 for three products: raw materials for the pharma industry, medical devices, and large-scale electronics manufacturing. In November 2020, 10 more sectors were included, and in September 2021, PLI for drones was added to the list.