Budget 2023: FM gives PLI Scheme expansion a miss

Technicians working in electronics manufacturing company, Dixon Technologies based in Noida. It is a contract manufacturer of televisions, washing machines, smartphones, LED bulbs, battens, downlighters and CCTV security systems for companies such as Samsung, Xiaomi, Panasonic and Philips. Image credit: Madhu Kapparath

One of the most anticipated announcements for Budget 2023 was the expansion of the government’s Production-Linked Incentive (PLI) scheme to newer sectors including toys, leather, renewable energy and a few more. However, there was no mention of the PLI scheme in Finance Minister Nirmala Sitharaman’s Budget speech.

“The Union Budget speech from the indirect tax perspective was customs-centric, with an intention to boost exports, domestic manufacturing/ value addition,” says Abhishek Jain, partner, indirect tax, KPMG in India. “Specific announcements on further PLI schemes and customs amnesty scheme may have provided further cheer,” he adds.

As per the Economic Survey 2023, the scheme, under the Make-in-India programme, is expected to attract a capex of approximately Rs 3 lakh crore over the next five years and has the potential to generate employment for over 60 lakh in India. For instance, for the toy manufacturing sector, explains Amit Chakraborty, president, toys division, Aequs, “For every $10 million generated in revenues, the industry has the potential to create 1,000 direct jobs, not including the downstream employment.” Outside of employment, the other major benefits of implementing a PLI scheme are a massive boost for MSMEs, the development for ancillary industries and the fostering of innovation in each sector.

The central government introduced the PLI scheme for 14 sectors, with a total incentive outlay of Rs 1.97 lakh crore. In March 2020, the scheme was announced for three sectors, followed by an additional 10 in November. Last September, the scheme was also extended to the drone and drone component sector. As per the Economic Survey, by December 31, 2022, 717 applications have been approved under 14 schemes. More than 100 MSMEs are among the PLI beneficiaries in sectors including mobile manufacturing, manufacturing of medical devices, automobiles and auto components, pharmaceuticals, drugs, specialty steel, drones and drone components.

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One of the sectors that is certain to be included under the PLI scheme is the toy manufacturing sector. Manu Gupta, chairman, Toy Association of India, and chairman, Playgro Toys Group, says, “I am an eternal optimist, we are very hopeful for an early announcement. But in the meantime, the government has increased toys import duty again, showing the resolve and direction to create a level playing field for toy manufacturers.”