Of the Rs 1.97 trillion that the government intends to spend on all 14 production-linked incentive (PLI) schemes, around Rs 41,000 crore remains unutilised as of now, according to a senior government official.
This means that 80 per cent of the total allocated amount, or Rs 1.56 trillion, will be used to pay incentives to companies eligible to claim benefits over the next few years.
The unutilised amount/savings result from undersubscription, lukewarm responses in the case of schemes such as textile, as well as a reduction in the allocation of schemes.
In some cases, beneficiaries' claims have also been rejected by government agencies as companies were unable to fulfil relevant criteria, resulting in lower-than-expected utilisation of the scheme.
For instance, in 2020, the announced financial outlay for automotive and automotive components was Rs 57,042 crore, reduced by more than 50 per cent to Rs 25,938 crore when notifying the scheme in 2021.
Top government officials believed that such high funds for the sector were not needed.
By December 2021, the Department for Promotion of Industry and Internal Trade (DPIIT) estimated that total savings for the government under the PLI scheme had been Rs 11,484 crore, owing to a rejig in allocation among various PLI schemes.
However, the savings can be utilised or reallocated to any other government department in need of funds for the PLI scheme, a provision made while designing the scheme.
New PLI schemes
Over the past year, several government departments have pushed for introducing more PLI schemes, although top government officials believe that new schemes should be rolled out after assessing the efficacy of the existing scheme.
DPIIT has also recommended an outlay of Rs 3,489 crore for a PLI scheme on toys and Rs 2,600 crore for the leather and footwear sector. Government officials have clarified that the scheme is not yet approved by the Union Cabinet in both cases.
Hence, the token provision has only been made for 2024-25.
"An entity availing of benefits under any other PLI scheme of the Government of India shall not be eligible for the same product,” according to the Interim Budget document.
In a post-Budget interview last week, Commerce and Industry Minister Piyush Goyal told Business Standard that not only DPIIT, but different departments have sought different PLI schemes, and many are under consideration.
“They will see which scheme will be useful and will be in the country’s best interest,” Goyal had said.
The Rs 1.97 trillion worth PLI scheme was launched in 2020-21 to make India a manufacturing powerhouse, improve the cost competitiveness of locally produced goods, create employment opportunities, curb cheap imports, and boost exports.
The scheme has been launched for 14 sectors, including smartphone, drone, telecommunications, textile, automotive, consumer durables, and pharmaceutical, among others.
Factors at work
- Unutilised amount as of 2023-24: Rs 41,000 crore
- Unutilised amount as of 2021-22: Rs 11,484 crore
- Unutilised amounts are a result of undersubscription, lukewarm response in the case of schemes, such as textile, reduction in the allocation in schemes, rejection of claims
- Unutilised amount/savings can be used to launch more production-linked incentive schemes in the future if needed