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Informist, Tuesday, Oct. 29, 2024

 

By Krity Ambey

 

NEW DELHI – Since production-linked incentive schemes were launched in 2020-21 (Apr-Mar), the government has disbursed about INR 82 billion under these, a senior government official said. For these schemes, which are operational in 14 manufacturing sectors, the government releases funds at the end of each quarter.

 

"The electronics sector has obviously received the largest chunk of the disbursed funds," the official told Informist. The electronics sector has been the top beneficiary since the launch of the scheme. Other sectors for which the government has provided incentives are food products, bulk drugs, medical devices, pharmaceutical drugs, and telecom and networking products, the official said.

 

As per data by the Department for Promotion of Industry and Internal Trade, the government had disbursed INR 44.15 billion under the scheme to eight sectors till December. The Union Cabinet has approved an ambitious outlay of INR 1.97 trillion for production-linked incentive schemes in 14 sectors for five to seven years. While the disbursal of funds under the schemes was slower than anticipated, production as well as the disbursal of funds is expected to pick up now, the official said.

 

The sectors for which production-linked incentive schemes have been announced are large-scale electronics, information technology hardware, bulk drugs, medical devices, pharmaceutical drugs, telecom products, food products, automobile, solar module, speciality steel, white goods, advanced chemistry cells, textiles, and drones. Under production-linked incentive schemes, the government offers benefits to companies for incremental sales of products manufactured in India over the year when the scheme for the sector is announced.

 

By the end of March, the government expects to receive claims from the automobile sector as well, considering its gestation period has ended, the official said. After the electronics sector, the automobile sector has the second-highest share in allocation of INR 259.38 billion under the production-linked scheme. 

 

The government has extended the scheme for the automobile sector by another year till FY28. Its gestation period was initially set to end in FY23, and disbursal was supposed to begin from FY24. However, after the extension of the scheme, the gestation period was also extended by a year.

 

The government is about to complete four years since the launch of the production-linked incentive schemes but so far, only eight sectors have been able to claim disbursal. Some sectors that are yet to meet conditions for disbursal are automobiles, white goods, advanced chemistry cell, solar photovoltaic modules, speciality steel, and textiles.

 

In the Budget for FY25, the government had provided token provisions for production-linked incentive schemes for the toy, and leather and footwear manufacturing sectors as well. For production-linked incentive schemes for the toy and leather and footwear sectors, the government has recommended an outlay of INR 34.89 billion and INR 26.00 billion, respectively, for seven years till FY32. The Budget has provided a token provision for the two schemes as the Cabinet is yet to approve them, according to the Budget documents.  End

 

Edited by Avishek Dutta

 

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