Leveraging PLI To Achieve 'Make In India' Goals In The Consumer Electronics Sector
To fully realise the potential of the PLI scheme, the government needs to complement it with other supportive measures, feels Kagalwala
India's consumer electronics market has witnessed significant growth, driven by rising disposable incomes, increasing urbanisation, and an expanding middle class. The government's 'Make in India' initiative aims to transform the country into a global manufacturing hub, and the production-linked incentive (PLI) scheme is a cornerstone of this strategy.
Mapping The Advantages
The PLI scheme has played a crucial role in inviting investments and boosting local production of consumer electronics. By granting financial incentives to companies that meet specific goals on production levels and investments, this plan has encouraged manufacturers to establish or extend their operations in the country. As a result, this emphasises on higher production capacities, job creation, and technology transfer. Furthermore, the program is also intended to attract foreign direct investment (FDI) by using India’s huge consumer market. These multinational corporations introduce advanced technologies and best practices that improve local manufacturing capacity. Foreign investment thus not only creates good jobs but also stimulates the growth of supporting industries, hence strengthening the overall manufacturing ecosystem.
The advantage of this scheme is also that it helps reduce India’s dependence on imports because of domestic manufacturing promotion thereby creating an independent ecosystem. This is particularly important for components and raw materials since traditionally they have been imported intensively into India. Stronger domestic supply chains can make the industry more resilient and less exposed to disruptions on global supply lines elsewhere.
Moreover, the PLI scheme has been driving the adoption of advanced technologies and production processes through strict performance standards set for qualification purposes. For firms to qualify under this scheme they must invest in research and development as well as automation and digital technology used by them. This has greatly enhanced the country's manufacturing capabilities leading to increased productivity and competitiveness.
Realising Its Potential
For the 2023-24 fiscal year, INR 6,800 crore was allocated by the government for eligible beneficiaries which fell short of the estimated INR 11,000 crore. As of January 2024, the PLI scheme had approved 746 applications across fourteen sectors such as large-scale electronics manufacturing (LSEM), IT hardware, bulk drugs, medical devices, pharmaceuticals, and telecom products. By June 18th, 2024, about INR 9,700 crore had been paid to beneficiaries representing around 5 per cent of the total estimate.
However, there are still challenges ahead. Although the PLI scheme has successfully attracted investments, sustaining the ecosystem in the long term requires continuous policy backing. The growth of this sector depends on creating a favourable business environment that includes efficient infrastructure, skilled workforce and access to finance. Additionally, more emphasis should be put on developing domestic capabilities in design and R&D for value addition.
To fully realise the potential of the PLI scheme, the government needs to complement it with other supportive measures. This includes improving the ease of doing business, reducing bureaucratic hurdles, and providing incentives for skill development. Additionally, promoting collaboration between industry, academia, and research institutions can foster innovation and technology transfer.
The scheme has laid the foundation for a robust and self-reliant electronics industry. However, sustained policy support and a focus on building a comprehensive ecosystem are essential to ensure the long-term success of the sector.
