With the nation’s GDP projected to hit an impressive $5 trillion by 2025, India is steadily leading its way to becoming a global manufacturing hub.
Even industry experts are dubbing the current period as India’s “prime era” of industrial growth, fueled by a remarkable surge in the sector. Currently holding a 2.7 per cent share in global manufacturing, the nation recognises the need for strategic momentum to expand its footprint. In response, government initiatives are zeroing in on high-potential sectors, paving the way for a dynamic phase of progress.
A standout effort is the Production-Linked Incentive (PLI) scheme, designed to boost domestic production while reducing import dependency. Launched in 2020, the initiative aims to bolster India’s self-reliance and global competitiveness by providing financial incentives to eligible companies.
PLI Keeping Businesses Ahead
The PLI scheme is more than a single-focused initiative—it enhances the entire manufacturing ecosystem. Over the past decade, the industry has comprehended and overcome challenges such as regulatory hurdles, infrastructure gaps, and limited foreign direct investment (FDI).
This becomes possible by adopting emerging trends like smart manufacturing, where automation, robotics, and digital technologies reshaped traditional processes and opened the gate for global competitiveness. Here, the PLI scheme has further created a fertile ground for global investments, evidenced by an impressive 69 per cent growth in FDI, now amounting to $165.1 billion.
This surge reflects growing trust in India’s potential to deliver on its manufacturing ambitions. Beyond economic metrics, the industry has always been a key driver of job creation and skill development. The PLI scheme takes this further by encouraging companies to increase production and set up facilities, even in less industrialised areas.
This creates demand for skilled and unskilled labor, diversifying job opportunities beyond metropolitan areas. Further, it reduces regional unemployment disparities, creating over 8.5 lakh direct and indirect jobs.
From Importer to Exporter
India is determined to cement its position as a crucial player in global supply chains by continuously improving its physical and digital manufacturing infrastructure. PLI schemes drive investments in advanced technologies and expanding production capacities by linking incentives to incremental production beyond a specified base year.
This strategic approach motivates businesses to scale their operations, enhancing local supply networks while seamlessly integrating them into global demand dynamics.
Additionally, the scheme focuses on industries with significant global potential, such as electronics, where India is now poised to transition from being an importer to an exporter. This emphasis reduces dependency on external sources while creating a robust export surplus in high-value segments.
Eventually, this creates a ripple effect as large enterprises leverage the capabilities of micro, small, and medium enterprises (MSMEs) for critical inputs, elevating these smaller entities to compete on international platforms. Focusing on export-oriented production, the PLI scheme enables Indian manufacturers to align with global standards. This strengthens India’s reputation as a dependable trade partner and sets the stage for achieving the ambitious $2 trillion export milestone.
Impact on Potential Sectors
Since its launch, the PLI Scheme has made impressive progress across various sectors. Initially focused on three key industries—electronics, automobiles, and pharmaceuticals—the scheme has delivered measurable impacts.
Global electronics industry leaders have ramped up manufacturing operations in India, with exports witnessing significant growth. For instance, India’s smartphone exports surged by 42 per cent in FY24, reaching $ 15.6 billion, underscoring the country’s emergence as a major player in the global electronics supply chain.
Similarly, the scheme focuses on electric vehicles (EVs) and advanced automotive technology (AAT) products in the automobile sector, backed by the budgetary outlay of Rs 25,938 crore. Its primary goal is to encourage deep localisation of AAT products while fostering domestic and global supply chain development. Moreover, in pharmaceuticals, the emphasis on high-value drugs and active pharmaceutical ingredients (APIs), with an outlay of $ 2 billion, fostering expansion in this critical sector.
Fast forward to August 2023, the scheme has grown to encompass 14 high-potential sectors, supported by an outlay of more than $26 billion. This includes the food processing sector, with an allocation of Rs 109 billion, aimed at leveraging agricultural resources and enabling competitiveness against low-cost global players. This substantial backing has set the stage for sustained growth, enhancing India’s manufacturing capabilities and solidifying its position in global supply chains.
Manufacturing the Future
The government’s commitment to strengthening domestic manufacturing and job creation is evident in the enhanced expected allocation of Rs 14,167.1 crore for the PLI scheme in FY25. Extended to include labor-intensive industries and MSMEs, the program aims to position India as a global manufacturing leader.
With further focus on chemicals, green energy, and auto parts, the initiative aligns with broader industrial strategies to foster innovation, drive economic growth, and create sustainable employment opportunities, paving the way for inclusive development and manufacturing excellence.
