PLI pie may widen to 15% in capex in 4 yrs

Mumbai: Production-Linked Incentive (PLI) scheme will account for 13-15 per cent of the average annual investment spending in key industrial sectors over the next three-four years, according to a report by Crisil.

Since its introduction in March 2020, PLI has been announced for 15 sectors, involving government incentives to the tune of Rs1.93 lakh crore. Of this, 50-60 per cent is to be spent on sectors with domestic manufacturing and export focus, and the rest on import localization. "Implementation of the PLI scheme will lead to a potential capital expenditure (capex) of Rs2.5-3 lakh crore over the scheme period and will account for 13-15 per cent of average annual investment spending in key industrial sectors over the next 3-4 years," the rating agency said in a report released on Wednesday.

PLI is now poised for a rapid on-the-ground execution, with almost 60 per cent of the capex already approved and major spending set to occur over FY23-FY26. The capex has been approved for 10 sectors, it said.

While the capex in mobile, pharma and telecom has already kicked off, that in capital-intensive sectors such as automobile and solar photovoltaics — which form 70 per cent of the committed investment — will kick off from April 2022, the agency said. The scheme has received interest from over 900 players across sectors, of which around 350 have got approval so far. The Crisil Director Hetal Gandhi said PLI will spur green investments in India, with around 55 per cent of the scheme expected to be green, in sectors such as electric vehicles/fuel cell electric vehicles, and solar photovoltaics. The report said that along with supply-chain integration, PLI will aid exports too. Of the 15 sectors, nine have an export potential, ranging from 20-80 per cent of the incremental revenue generated, the agency said, adding that this, in turn, can create an annual export potential of Rs 2 lakh crore or 6 per cent of the total exports of calendar year 2021. Sectors that could benefit from exports include mobiles, pharma, food processing, IT hardware, white goods and specialty steel, the agency said.