After noticing positive outcomes, India is likely to significantly increase the budgetary allotment for ongoing Production-Linked Incentive (PLI) initiatives on February 1. The initiative that aims to revive manufacturing in India and increase exports may include a few new industries as well as other measures to encourage investments.
According to those familiar with the discussions, allocations for industries like electronic manufacturing and IT hardware that have experienced a significant impact on the ground as a result of active PLI programmes could be increased. The PLI programmes, which currently span 14 important industries, were funded with 1.97 lakh crore in the FY22 budget, according to Finance Minister Nirmala Sitharaman. The budget may increase this incentive amount, which is for the five-year period commencing in FY22.
“The overall PLI allocation might be improved… It is a plan that appears to be having an effect locally “one of the individuals mentioned above noted. Another person speculated that the upcoming budget may grow by 20–30%.
India is eager to convey to multinational companies looking to diversify their supply chains as part of their China+1 strategy that it intends to provide a desirable industrial ecosystem.
The budget may also extend for a few more years the 15% corporate tax rate that is available for new manufacturing investments.
The individual cited above stated that “measures to attract private investment would be one of the areas of focus,” adding that one such step that is currently under consideration is increasing PLIs. The source indicated that this would be supplemented by easing compliances in many areas.
According to experts, the government should consider expanding on the program’s success.
According to Vikas Vasal, national managing partner, tax, Grant Thornton Bharat, “In a short period of time, PLI plans have evinced good interest from businesses and investors.” “In addition to boosting the expenditure in some of the existing areas, there is a need to broaden the coverage by adding other sectors to support manufacturing and exports.”
Finances won’t be significantly affected by more cash.
Rahul Bajoria of Barclays agreed that it was important to build on the early success, saying that given the backloaded nature of payouts, there was unlikely to be a significant impact on the fiscal math.
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