PLI Scheme Boosts FDI In India’s Manufacturing Sector

The Production-Linked Incentive (PLI) scheme has been a game-changer for India’s manufacturing sector, leading to a remarkable 69% increase in Foreign Direct Investment (FDI) equity inflows, which jumped from $98 billion (2004-2014) to $165 billion (2014-2024).

This surge is a testament to the government’s commitment to strengthening domestic manufacturing and enhancing India’s position in the global supply chain.

Key Investments & Impact

As of August 2024, actual investments have reached Rs 1.46 lakh crore, with projections suggesting the figure will surpass Rs 2 lakh crore by the end of the next year.

These investments have already resulted in a significant rise in production and sales, contributing to an estimated Rs 12.50 lakh crore in economic activity.

Furthermore, these investments have directly and indirectly generated around 9.5 lakh jobs, with the number expected to reach 12 lakh in the near future.

Several sectors have seen substantial increases in funding under the PLI scheme. For instance, the allocation for Electronics and IT Hardware has risen sharply from Rs 5,777 crore (revised estimate for 2024-25) to Rs 9,000 crore.

Similarly, the allocation for Automobiles and Auto Components has surged from Rs 346.87 crore to Rs 2,818.85 crore, with the textile sector also witnessing a major boost, with its allocation increasing from Rs 45 crore to Rs 1,148 crore.

Electronics Sector Growth

The PLI scheme has notably transformed India’s electronics manufacturing sector. As a result, the country has shifted from being a net importer of mobile phones to becoming a net exporter.

In fact, domestic production of mobile phones grew from 5.8 crore units in 2014-15 to 33 crore units in 2023-24, and exports reached 5 crore units.

This growth is further reflected in the 254% increase in Foreign Direct Investment (FDI) in this sector, marking a clear indication of the scheme’s success in driving investment and manufacturing growth.

Automotive & Renewable Energy Sectors Thrive

The automotive sector has seen significant investments under the $3.5 billion (Rs 20,750 crore) automotive PLI scheme, attracting $8.15 billion (Rs 67,690 crore) in investments.

Over 115 companies applied, with 85 approved for incentives, surpassing the target and further strengthening India’s presence in the global automotive market.

India’s renewable energy goals have also received a substantial boost, particularly in solar energy.

The PLI scheme’s funding for solar PV modules aims to build a manufacturing capacity of 65 GW, contributing to both job creation and reducing India’s dependence on imports.

Telecom & Tech Growth

In the telecom sector, India has achieved 60% import substitution under the PLI scheme.

The country has emerged as a key player in the global supply chain, becoming a major exporter of 4G and 5G telecom equipment.

This growth has strengthened India’s telecom infrastructure and solidified its position in the global technology market.

The PLI scheme has not only accelerated the growth of various sectors in India but also significantly boosted foreign investments, enhanced production capabilities, and contributed to job creation.

This initiative is crucial in positioning India as a competitive player in the global manufacturing sector, contributing to long-term economic growth and development.

As the country continues to focus on self-reliance through initiatives like Atmanirbhar Bharat, the PLI scheme remains a vital component in India’s journey toward becoming a global manufacturing hub.

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