The Manufacturing Sector: Growth Story of India

PLI PUSH FOR MANUFACTURING To support the domestic manufacturing and generate employment opportunities, government of India announced PLI schemes under 14 key sectors with a total budgetary outlay of INR 1.97 lakh crores (USD 24 Bn). The PLI schemes were expected to achieve a minimum production of over USD 500 billion (INR 41,135 Bn) in 5 years from the year 2021. Considering this target, 13 schemes were announced with clear production targets, timelines, and budgetary outlays. While the PLI schemes across these 14 sectors received varied responses, the below table cites progress made so far in some sectors 24 -

Out of the proposed PLI schemes, sectors including chemical, pharma, food products, and aviation have recorded a positive response as well growth in investment, employment, and production. More than 600 firms have been selected in 2 years across 14 sectors to achieve the desired targets. 34 On the other hand, certain PLI schemes were not able to fetch desired results in terms of target production and investments. Government has identified the challenges and is working on the revision of these schemes in terms of incentives and tenure to address these challenges. The results of these modifications would be evident in the coming years. 35

Scheme/Launch Date/Budget Outlay

Sector Background

PLI Objective/Target

Current Status

PLI Scheme for Advanced Chemistry Cell (ACC) Battery Storage Announced in May 2021 Budgetary outlay of INR 18,100 Crores (USD 2.2 Bn)

Manufacturing capacity of 50 Giga Watt Hour (GWh) of ACC for Enhancing India’s Manufacturing Capabilities. Additionally, private players are expected to create battery manufacturing capacity of ~95 GWh 26

India’s annual demand for ACC batteries is projected to rise between 104 gigawatt-hours (GWh) and 260 GWh by 2030 across multiple sectors from existing domestic demand of 2.7 GWh as of Sept 2022 25

This scheme was oversubscribed by 2.6 times (130 GWh). Finally, 4 companies were selected for incentives under PLI Scheme for Advanced Chemistry Cell (ACC) Battery Storage 27 28

Chemical Pharmaceuticals Aviation Food Products

PLI 1.0 and PLI 2.0 - List of approved applicants is out PLI Scheme for Promoting Domestic Manufacturing of Medical Devices - A total of 26 projects have been approved, with a total committed investment of INR. 1206 Cr. Out of this, INR. 714 Cr has been realised to date. A total of 14 projects have been commissioned and domestic production of high-end medical devices has begun. 30 A provisional list of 23 PLI beneficiaries was released on 6th July 2022. The shortlisted companies witnessed an increase in combined annual sales turnover from Rs 88 crore (USD 10.69 Mn) in FY 2020-21 to Rs 319 crore (USD 38.77 Mn) in FY 2021-22 32

PLI Scheme for Bulk Drugs (PLI 1.0) - Announced on July 2020 with Budget outlay of INR 6940 Cr. (USD 0.84 Bn) PLI Scheme for Bulk Drugs (PLI 2.0) - Announced on Mar 2021 with Budget outlay of INR 15000 Cr. (USD 1.82 Bn) PLI Scheme for Promoting Domestic Manufacturing of Medical Devices with a Budget Outlay of INR 400 Cr. (USD 50 Mn)

India has around 80-85% import dependency on APIs and medical devices from other countries, majorly China. India imports APIs worth INR 35,000 crore (USD 4.25 Bn) annually from China which is dominant in the manufacturing of APIs 29

The main objective is to boost domestic production of 41 select critical bulk drugs and reduce import dependency

Through PLI, the annual sales turnover of the drone manufacturing industry is expected to grow from INR 60 crore (USD 7.29 Mn) in 2020-21 to over INR 900 crore (USD 109 Mn) in FY 2023-24

PLI Schemes for Drones and Drone components - Announced on 30/9/2021 with budget outlay of 120 crores (USD 0.014 Bn)

The drone services industry is expected to grow to over INR 30,000 crore (USD 3.64 Bn) and over five lakh jobs by 2024 31

To increase processing capacity of processed food output of Rs 33,494 crore (USD 4.07 Bn) and create employment for nearly 2.5 lakh persons by the year 2026-27

India’s food processing sector is one of the largest in the world which has recorded a production of 315.7 million tons in 2021-22

PLI for food processing industry - Announced on 26 May 2021 with a budget of INR 10,900 Cr. (USD 1.32 Bn)

182 applications have been approved as of Dec 2022 33

24 PIB – PLI schemes in India | 25 IBEF – Chemical Industry in India | 26 PIB – PLI scheme for ACC battery storage | 27 Invest India – PLI schemes in India | 28 PIB – PLI scheme for ACC battery storage | 29 Financial Express – Article on Indian Pharma sector and its dependency on China

30 Annual Report by Department of Pharmaceutical, India 2020-21 | 31 PIB – PLI scheme features for Drone and Drone Components | 32 PIB – PLI Scheme for Drone and Drone components | 33 PIB – Achievement of MoFPI, India (Jan to Dec 2022) | 34 Business Standard – Challenges of PLI schemes | 35 Financial Express – Article on PLI scheme for IT Hardware

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The Manufacturing Sector Growth Story of India

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