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To encourage mfg in Tier 2&3, PLI scheme relook in the offing

To encourage manufacturing activity in smaller cities and towns, the government is likely to consider the option of lowering the minimum investment and turnover criteria under the ₹1.97 lakh crore Production Linked Incentive (PLI) scheme in Tier-2 and Tier-3 cities in sectors such as textiles, where second edition of the scheme are being drafted, and also some new sectors, like toys and furniture, which may get incorporated, according to sources.

“In the review meeting for PLIs that is being convened by Commerce and Industry Minister Piyush Goyal next week, the proposal for lower eligibility criteria for investments in Tier 2 and Tier 3 cities made by several industry sectors is likely to be taken up for consideration,” a source tracking the matter told businessline.

All stakeholders, including representatives from line Ministries and Departments, the industry, Niti Aayog, and Project Management Agencies, will participate to give their assessment of the scheme so far and share suggestions on the alterations needed, the source said.

The PLI scheme, announced in 2020 to attract investments in 14 sunrise and strategic schemes over a five-year period, has had a slow start, with disbursals of just ₹2,900 crore so far out of the corpus of ₹1.97 lakh crore.

While a handful of sectors, such as large-scale electronics comprising mobile phones, pharmaceuticals, and food processing, are doing well, there are six sectors, including white goods, automobiles, auto parts, textiles, solar PV modules, and ACC batteries, where disbursals are negligible or yet to happen.

Small investors’ plaint
“Industry representatives in certain sectors, including textiles and food processing, have been complaining about the high threshold levels of investments and turnover for eligibility as they are a disincentive for smaller investors. Lowering the thresholds for Tier-2 and Tier-3 cities could allow smaller investors to benefit from the scheme and also spread production activities and create employment across the country. This can be done in the new editions of the scheme, like the one being planned for textiles,” the source said.

The option of offering lower eligibility criteria for Tier-2 and Tier-3 cities could also be considered for newer sectors with high employment potential that may be brought under the scheme, such as toys and furniture, the source added. The Hindu BusinessLine

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