ICRA: PLI scheme to unlock India’s manufacturing capacity

According to credit rating agency ICRA Limited, the government’s production-linked incentive (PLI) scheme will unlock manufacturing capacity as well as support in attracting about Rs 4 trillion of capital expenditure (capex) over the next five years.

Further, incremental revenues of Rs 35-40 trillion are expected over the next five years due to a reduction in net imports. Currently, manufacturing capex forms around 20-25 per cent of the total capex in India.Sectors under which the PLI scheme has been announced currently constitute 40 per cent of the total imports.The scheme, spread across 14 sectors, can enhance India’s annual manufacturing capex by 15 to 20 per cent from 2022-23. However, potential challenges are expected from execution delays, increasing funding costs, availability of requisite infrastructure and delays in approvals.

 

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