India weighs changes to improve uptake of production incentive scheme – sources

By Shivangi Acharya and Sarita Chaganti Singh

NEW DELHI (Reuters) – India is planning to ease and expand some norms for five sectors to help them better utlise its $24 billion industrial incentives aimed at boosting local manufacturing, two government officials said on Thursday.

The 1.97-trillion rupees production-linked incentive scheme (PLI), launched in 2020, covers 14 sectors ranging from electronic products to drones but has been successful only in a handful of them, triggering reviews.

The changes are being planned in the textiles, pharmaceuticals, drones, solar and food processing industries, which together form nearly a third of the PLI scheme.

The government plans to include more products in the textile sector such as man-made fibre and give firms an additional year to meet the manufacturing targets required to claim incentives for the scheme, the officials said.

The scheme will also be extended by a year for the pharmaceuticals sector, while the financial allocation will be raised for incentive payouts to the production of drones to 3.3 billion rupees from the current 1.2 billion rupees, the officials added.

For the food processing sector, India plans to extend the scheme to millet-based products and include the production of ingots and wafers in the scheme for the solar module sector, the officials said.

India’s trade ministry, which oversees the scheme’s implementation, is discussing the changes with other federal departments, they said.

The officials did not wish to be named as details of the discussions have not been made public.

The trade ministry did not respond to an emailed request for comment.

“None of the changes currently being discussed require fresh financial allocation, but will draw from the scheme’s savings,” one of the officials said.

Consumer-goods companies like Hindustan Unilever Ltd, ITC Ltd, Nestle India Ltd, and Britannia Industries Ltd are part of the food processing incentive schemes, while companies such as Reliance Industries, JSW Energy and Tata Power are part of the solar module manufacturing incentive scheme.

A fraction of the PLI incentives has been claimed so far, prompting the government to consider ways to allocate unused funds, including a plan to bring new sectors into the scheme’s fold.

($1 = 83.2675 Indian rupees)

(Reporting by Shivangi Acharya and Sarita Singh; Editing by Sohini Goswami)