‘PLI to account for 13-15% capex in key sectors in 3-4 years’

India is prone to see an incremental income addition of Rs 30-35 lakh crore over the following 3-4 years of Production Linked Incentive (PLI) schemes introduced for varied sectors, Crisil Research stated in an evaluation.

“The implementation of the PLI scheme will lead to a potential capital expenditure (capex) of Rs 2.5-3 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 worldwide analytics firm stated in a be aware.

The Central authorities’s flagship PLI scheme, which was introduced in March 2020, is operational for 15 sectors reminiscent of electronics and cell manufacturing, photo voltaic tools, prescription drugs, medical units, cars and auto parts, amongst others. Of these, the capital funding in sectors reminiscent of cell, prescription drugs, and telecom manufacturing has already began, whereas the remainder of the sectors might see these investments beginning April 2022, Crisil Research famous.

“PLI will spur green investments in India, with (nearly) 55 per cent of the scheme expected to be green, in sectors such as auto for electric vehicles/fuel cell electric vehicles, solar photovoltaics, and automotive cell company (ACC) batteries. The incentive-to-capex ratio varies among sectors … is particularly attractive for mobile phones, electronic components, telecom equipment, and IT hardware, which have high dependence on imports across value chains and relatively lower domestic base,” stated Hetal Gandhi, director, Crisil Research.

Though among the sectors beneath PLI reminiscent of batteries and speciality metal would require higher dedication from the businesses, if profitable, these investments will guarantee an general improvement of the ecosystem even after the PLI scheme ends, it stated. “Aside from supply-chain integration, PLI will aid exports, too. Of the 15 sectors, nine show an export potential, ranging from 20-80 per cent of the incremental revenue generated. This, in turn, can create an annual export potential of Rs 2 lakh crore, or 6 per cent of the total exports of calendar 2021,” it stated.