Monday, July 15, 2024

Government Plans Overhaul of PLI Schemes to Boost MSMEs

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The government of India is set to overhaul its production-linked incentives (PLIs) to bolster the micro, small, and medium enterprises (MSME) sector. Recent reports indicate that PLI schemes reforms will include easing fund release norms, expanding sector coverage, and introducing special incentives tailored for labour-intensive MSMEs.

Under the proposed changes, the government will allow quarterly disbursements of incentives, departing from the previous annual release cycle. This shift aims to expedite the flow of funds to beneficiaries and enhance operational flexibility. Sectors like toys, furniture, and apparel are slated to be included in the revamped PLI scheme due to their potential for job creation.

Furthermore, there are plans to extend the scope of PLIs to encompass man-made fibre (MMF), technical textiles, and certain cotton-based apparel. This expansion is anticipated to be announced in the upcoming budget, aiming to stimulate growth in these critical sectors.

In addition to sectoral expansions, the revamped PLI scheme will also focus on promoting research and development (R&D), fostering a robust manufacturing ecosystem across various industries. This strategic emphasis is expected to attract investments and drive technological innovation within the MSME segment.

Despite the significant financial commitment of Rs 1.97 lakh crore (over $26 billion) allocated to the PLI scheme, only a fraction has been disbursed by March 2024, amounting to Rs 9,700 crore. In the fiscal year 2023-24 alone, incentives worth Rs 6,800 crore were distributed across different sectors, highlighting the scheme’s impact on economic activity and employment generation.

As of December 2023, PLI companies have collectively invested approximately Rs 1.07 lakh crore, resulting in incremental sales exceeding Rs 9 lakh crore and the creation of 7 lakh jobs nationwide. These figures underscore the scheme’s role in stimulating industrial growth and supporting job-intensive sectors.

Initially launched in March 2020 with a focus on raw materials for the pharmaceutical industry, medical devices, and large-scale electronics manufacturing, the PLI scheme has progressively expanded. Additional sectors, including drones in September 2021, have been included to promote indigenous manufacturing capabilities and reduce dependency on imports.

Govt initiative to revamp PLI schemes reflects its commitment to fostering a conducive environment for MSMEs through targeted incentives and sectoral expansions. These reforms are poised to accelerate economic growth, enhance competitiveness, and create sustainable employment opportunities across diverse sectors of the Indian economy.

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