|Introduction: Contextual introduction.|
Body: Explain how Production-linked Incentive (PLI) scheme has been a game changer for exports from India.
Conclusion: Write a way forward.
The PLI Scheme was launched as a part of the National Policy on Electronics 2019 to give incentives of 4-6% to electronic companies. The PLI is an innovative scheme that provides incentives in terms of cash to various companies for enhancing their domestic manufacturing apart from focusing on reducing import bills and improving the cost competitiveness of local goods.
A game changer for exports from India:
- It has not only transformed India into a manufacturing hub but has also curtailed its burgeoning trade deficit in electronics and other manufactured goods.
- Electronics manufacturing attracted a massive investment and its exports have grown rapidly by over 55 percent annually. Exports of mobile phones alone may reach $10 billion during the current financial year.
- India witnessed an unprecedented growth of 45 percent with exports touching $422 billion in 2021-22. It has been able to attract 22 top companies, including Apple and Samsung mobile phones in the electronics manufacturing segment.
- Despite global economic woes, India’s overall exports, merchant and services combined, grew at 17.33 percent to $641 billion during April-January 2022-23 compared to $547 billion during the same period last year.
- With 97% of mobile phones sold in India now being made in India. Furthermore, they are also being “Made in India for the World” as we witness a sharp growth in smartphones exports by 139% over the last three years.
- Similar successes are replicated in the pharmasector PLI with 35 imported active pharmaceutical ingredients or key chemical inputs for drugs being developed in India.
- In addition, other sectors, such as food products, telecom and networking products, and drones are reporting successes with visible growth in investment, employment, and production.
- Over 600 foreign and domestic firms have been selected across 14 key sectors in two years, indicating enthusiastic industry participation.
It is expected that, over the next five years, a manufacturing capacity of over $150 billion and exports of $100 billion will be tied up through the PLI scheme. Further, the government needs to rectify the challenges faced by Indian firms in manufacturing.