Electronics manufacturing, auto get best of Budget spending on PLI scheme

Union Budget 2023-24 has earmarked Rs 8,083 crore for production linked incentive schemes (PLI), a bulk of the money going for large-scale electronics manufacturing, which includes mobile devices, pharma, auto and auto components, and food processing.

Eight of the 14 PLIs covered in these segments account for 99 per cent of the money the Budget earmarked for the schemes across government ministries and departments.

The allocation is a three-fold jump from the revised Budget estimates for these schemes in FY22-23 which is pegged at Rs 2616 crore. No money was earmarked for PLI in FY 22-23 for the mobile devices segment.

The bulk of the money in FY23-24 PLI schemes--of Rs 4,499 crore-- is for large-scale electronics manufacturing which includes flagship mobile devices. That money is being allotted because five global (including three vendors of Apple Inc) and an equal number of homegrown mobile device makers have committed to be eligible for incentives is minimum incremental sales of Rs 50,000 crore in FY24 (double of FY23) to a maximum ceiling of Rs 120,000 crore ( compared to Rs 75,000 crore in FY 23).

The pharma sector has got the second largest PLI allotment, of Rs 1,200 crore.
 

An amount of Rs 604 crore has been allotted for auto and auto components in the Budget for FY23-24. Compare that to Rs 10.74 crore allotted in FY22-23, the first year of the PLI scheme for which the bills will be raised for payment in FY 24. In food processing, the Budget on Wednesday nearly doubled the PLI allocation to Rs 1,530 crore.

There are PLIs for which the Budget didn’t allot new money, telecom for instance. An amount of Rs 90.25 crore was earmarked in FY23 for PLI in telecom products, but there is no allocation for FY24. Equipment makers said that this is because the earlier scheme was revamped in June 2022 to promote the entire value chain of telecom production. Approvals for new players under the scheme was cleared in October last year.

For advanced battery chemistry battery storage, the allocation is only Rs 1 crore: that is because the three eligible players signed a government agreement for the Rs 17,500 scheme in June.  

The government’s flagship programme to encourage manufacturing is moving quickly, numbers show. Till December end, 717 applications had been approved for 14 PLI schemes. Data from implementing agencies showed that about Rs 47,500 crore ($6 billion) of actual investment has been made; sales worth Rs 3.85 trillion ($47 billion) of eligible products and employment generation for 300,000 people has been reported. It is a 106 per cent achievement of actual investment reported versus the corresponding projections for FY22.

The total allocation for the PLI schemes is Rs 1.97 trillion: the government has already cleared the amount, so any increase for some schemes is easily accommodated. The 14 PLIs have to make a total investment of $32 billion and generate revenues of $65 billion.  

PLI schemes	Earmarked in the budget FY 23-24
Pharma, bulk drugs  and medical devices	Rs 1200 crore
Drones	Rs 33 crore
White goods	Rs 65 crore
Large scale electronic manufacturing including mobile devices	Rs 4499
IT hardware	Rs 146 crore
Food processing	Rs 801 crore
Auto & auto components	Rs 604 crore
Textiles	Rs 5 crore

Source: Budget documents FY 23-24