Exclusive: PLI schemes for auto, battery, textiles, bulk drugs, among others, to be tweaked to spur investments

New Delhi, December 19: The Empowered Group of Secretaries has asked the Department for Promotion of Industry & Internal Trade to amend guidelines in the Production Linked Incentive (PLI) scheme for some sectors – Automobile/Auto Components (AUTO), Advance Chemistry Cells (ACC) and Textiles among them – to bring them up to speed.

For PLI-AUTO, the EGoS, headed by the Cabinet Secretary, approved that the initial year of its implementation be extended by one year to start from fiscal 2023-24 because though the scheme’s performance period began from April 2022, the firms were onboarded only in March 2022.

“Since it was non-feasible to meet the performance criterion of minimum 50 per cent domestic value addition in a month’s time, it was decided that the scheme start date be shifted to April 2023 for all parameters, except investment,” said an official.

In PLI-ACC, the Ministry of Heavy Industries (MHI) has been directed to earmark 10 GWh capacity for grid scale stationery storage application out of the residual 20 GWh while seeking bids under the second round. The PLI-ACC scheme aims at setting up manufacturing capacity of 50 GWh of which 30 GWh capacity was allocated in the first round.

The official said that successful bidders who got production capacity below 20 GWh in the first round would be eligible to participate in the second round where all selected companies would get two years for gestation and five years for claiming the incentives as in the first round.

The MHI, through a letter in October 2023, had opposed such segregation saying that “bid for 20 GWh ACC capacity under PLI-ACC scheme should be floated without demarcating part capacity for any specific end-use applications".

PLI projects for Textile Products, which fell behind due to delays in securing statutory approvals, would get a one-year extension of gestation period for investment from March 31, 2024 to March 31, 2025 and hence, the last year of incentive release would be extended March 31, 2030.

Textiles, like IT Hardware and Specialty Steel, has been struggling to get the PLI scheme going as investments have not been forthcoming. Textiles Ministry has had to twice extend the application period for second PLI round which targets investment of nearly Rs 11,000 crore.

Extensions would also be given in PLI Scheme for Bulk Drugs as incentive funds lie unutilised either because there are no investors or due to project delays. For chemical synthesis products, the tenure is being extended from fiscal 2027-28 to fiscal 2028-29 and for fermentation-based products, it would be extended from fiscal 2028-29 to fiscal 2029-30.

Out of 41 products under the PLI scheme for Bulk Drugs, there were no takers for eight products whereby an incentive outlay of Rs 1,655 crore lies unallocated. In the case of chemical synthesis and fermentation-based products, many applicants are unable to claim incentives due to the delay in commissioning of projects.

The PLI scheme for Medical Devices schemes is also being extended from fiscal 2027-28 to fiscal 2028-29 as there have been delays in commissioning of projects leading to under achievement of targets.

Through DPIIT changes, the Ministry of New & Renewable Energy would be empowered to utilise the estimated Rs 5,500 crore saving in PLI for High Efficiency Solar Photo Voltaic modules to promote the production of polysilicon and ingots-wafers required in the manufacturing of Solar PV modules.

Similarly, the Department of Food Processing would get to utilise savings of nearly Rs 1,000 crore to implement the PLI Scheme for Millet Based Products 2.0 from fiscal 2024-25, handing out 10 per cent incentive on incremental sales for the first four years, 9 per cent for the fifth and 8 per cent in the last year.

PLI schemes are a crucial part of Prime Minister Narendra Modi’s vision of making India a $5-trillion economy by strengthening the nation’s manufacturing sector by incentivising domestic and foreign investments.

Through these schemes, the government encourages companies to increase their manufacturing capabilities by spending on plant, machinery, associated utilities, R&D and transfer of technology. It provides incentives for five years on the increased manufacturing where the percentage varies for different sectors.

It currently targets 14 sectors of strategic and economic importance. As of November 2023, investments of nearly Rs 95,000 crore had materialised resulting in creation of nearly 4.5 lakh direct jobs, production of Rs 7.8 lakh crore and exports of Rs 2.8 lakh crore.