New Delhi:

India is planning to offer incentives of up to Rs 18,000 Crore ($2.2 billion) to spur local manufacturing in six new sectors including chemicals, shipping containers and inputs for vaccines, two government officials said.

The proposal is part of the country’s 1.97-trillion-rupee production-linked incentive scheme (PLI), launched in 2020 which currently targets 14 sectors ranging from electronic products to drones, but has been successful only in a handful of them.

A fraction of the PLI incentives has been claimed so far, prompting the government to allocate unused funds to new sectors.

Limited payouts under the scheme could lead to “large” savings which may be redirected to new sectors, the two government officials with knowledge of the plan said.

They did not wish to be named as details of the plan have not been made public. India’s federal trade ministry that oversees the scheme’s implementation did not immediately respond to an emailed request for comment.

The six new sectors that could join the PLI scheme also include toys, bicycles, leather and footwear, the officials said. These sectors will share the Rs 18,000 Crore (180-billion-rupee) allocation that is being carved out from the scheme’s original outlay, they added.

India sees the PLI scheme as crucial to boosting the broader Indian economy which has been starved of private investment for nearly a decade and is struggling to create adequate jobs, particularly in manufacturing.

Total incentives worth nearly 29 billion rupees were paid out in the fiscal year that ended in March. Little has been paid to businesses in sectors including speciality steel products, solar modules, and car components, according to a government report seen by Reuters.

In the fiscal year that started in April, the disbursements could rise to nearly 11,000 Crore rupees and to 40,000 Crore rupees by fiscal year 2024/25, one of the two officials said, citing an internal analysis by the government.

“The disbursements should be better than this estimate after some tweaks to the scheme,” the official said, adding such tweaks would help speed up payouts and some sectors may get an additional year or two under the scheme.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Union Finance Minister Nirmala Sitharaman. File
| Photo Credit: PTI

Finance Minister Nirmala Sitharaman on July 27 said the government will consider the Production Linked Incentive (PLI) scheme for Chemicals and Petrochemicals sector to make India a manufacturing hub for such products.

In view of stringent pollution control regulations and rising labour cost, she said, global manufacturers in the chemical industry are looking at diversifying their products and production capability and India stands out as an alternative destination for manufacturing.

Besides, India offers a large domestic market, she said while addressing the third edition of the summit on ‘Global Chemicals and Petrochemicals Manufacturing Hubs in India’.

“If viable options exist, it exists in such markets where there is a domestic buffer and beyond which there is an export potential. So that is where the government’s policies have been facilitating,” she said.

“We are in favour of having India becoming a manufacturing hub and therefore of course we will consider the PLI also for the chemicals and petrochemicals,” she added.

She emphasised that the industry which has great potential should create manufacturing capacity keeping in mind sustainability, carbon emission, general pollution and groundwater pollution etc.

“We should remember that India has set its sights on becoming energy independent by 2047 and achieving net zero by 2070. So net zero cannot be achieved unless each industry and each sector contributes to it.

“We are very focused on green growth. Carbon intensity has to be reduced and therefore each one of the sectors will have to contribute to this,” she said.

Energy efficiency and renewable energy commitments of India are also very important, she said, adding, India Inc. should keep that in mind the Net Zero goal of India and 500 gigawatts of installed electricity capacities from non fossil fuel sources.

The Hydrogen Mission is also something which she urged industry to keep in mind.

The government has approved a ₹19,744-crore incentive plan to promote the manufacturing of green hydrogen in the country in a bid to cut emissions.

The National Green Hydrogen Mission seeks to promote development of green hydrogen production capacity of at least 5 MMT (Million Metric Tonnes) per annum with an associated renewable energy capacity addition of about 125 GW in the country by 2030.

Highlighting four challenges — sustainability, recycling or becoming circular economy, skilling and technology adoption, she said, if Indian manufacturers focus on these issues, global investors would actively look at parking their money or forging joint ventures with Indian partners in chemicals and petrochemicals industry.

With regard to the industry’s task of addressing the issue of inverted duty structure on some of their items, the finance minister said, inversion on an item if corrected can have collateral somewhere.

Inversion of duty is a great concern for industry but it should be in a holistic fashion, she said, adding, she would welcome suggestions in this respect and the ministry will look at them.