Red flags over PLI scheme, NITI plans to watch efficiency

FOLLOWING RED FLAGS raised by the Department for Promotion of Industry and Internal Trade, the NITI Aayog has commenced work on evolving a set of goal standards to trace worth addition by corporations which avail monetary rewards below the NDA authorities’s flagship Production-Linked Incentive (PLI) scheme, in line with sources.

Taking the lead in making a centralised database to watch progress within the PLI schemes throughout sectors, the NITI Aayog plans to rope in an exterior company – state-owned IFCI Ltd or Sidbi – to design and put together the database. This database will seize worth addition, precise exports towards commitments made, and job creation.

So far, the federal government has introduced PLI schemes for 14 sectors together with car and auto parts, electronics and IT {hardware}, telecom, prescribed drugs, photo voltaic modules, metals and mining, textiles and attire, white items, drones, and superior chemistry cell batteries.

The PLI scheme, launched in March 2020, initially focused three industries- cellular and allied part manufacturing, electrical part manufacturing, and medical units. The incentives, calculated on the premise of incremental gross sales, vary from as little as 1 per cent for the electronics and expertise merchandise to as excessive as 20 per cent for the manufacturing of crucial key beginning medicine and sure drug intermediaries.

In some sectors similar to superior chemistry cell batteries, textile merchandise and the drone business, the inducement to be given might be calculated on the premise of gross sales, efficiency and native worth addition executed over the interval of 5 years.

At a latest evaluation assembly of the empowered group of secretaries set as much as deal with bottlenecks whereas implementing the scheme, officers from the DPIIT raised considerations there have been no frequent set of parameters to know the worth addition by corporations which have acquired or are more likely to obtain incentives below the PLI scheme.

ExplainedIs there bang for the buck?

With incentives below the PLI scheme topping Rs 2 lakh crore, stakeholders now really feel the necessity to verify if corporations availing advantages are creating worth.

“At present, different ministries monitor the value addition of their respective PLI schemes. There is no way to compare two different schemes. Also, there are various deliverables such as the number of jobs created, the rise in exports and quality improvement. There is no centralised database to gauge all these,” a senior authorities official who attended the assembly on March 31, mentioned.

Mails despatched to the DPIIT, the IT ministry and the Niti Aayog didn’t elicit a response.

The PLI scheme was conceived to scale up home manufacturing functionality, accompanied by increased import substitution and employment era. The authorities has put aside Rs 1.97 lakh crore below the PLI schemes for varied sectors and an extra allocation of Rs 19,500 crore was made in the direction of PLI for photo voltaic PV modules in Budget 2022-23.

Departments and ministries which work together with corporations working of their sector additionally face sure particular points. For occasion, at occasions, the goal for corporations to qualify for incentives are too steep.

Citing the instance of the Information Technology {hardware} sector, a authorities official mentioned, “Until last fiscal, only 3-4 companies managed to achieve the incremental sales targets to qualify for the PLI scheme. Fourteen companies had been approved. Unlike global companies, most domestic companies relied on one or two supply chains which have been severely disrupted and due to no fault of their own, these companies won’t qualify for the incentive. That needs to be looked at,” the official mentioned.

At the Niti Aayog evaluation assembly on March 31, it was additionally prompt {that a} dashboard to flag hurdles on the state stage be created. “These can then be addressed on priority,” mentioned one other official, who didn’t want to be named.

The empowered group of secretaries was instituted in June 2020, and tasked with figuring out the bottlenecks in PLI schemes, coordinating between states and corporations for quicker approvals, evaluating and making certain fast investments in PLI schemes, and making certain total turnaround of tasks.

The group is chaired by the Cabinet Secretary, and has the Chief Executive Officer of Niti Aayog, the secretaries of Department for Promotion of Industry and Internal Trade, Department of Commerce, Department of Revenue, Department of Economic Affairs, and the Secretary of the involved ministry as its members.