Production Linked Initiative i.e. PLI scheme was started by the Central Government, for which the government had to face a lot of criticism. It was alleged that this scheme was started to benefit big businessmen. However, now the benefits of this scheme have started becoming visible. PLI scheme is proving helpful in increasing government revenue. This smartphone scheme has emerged as a revenue bonanza for the government. The government is benefiting a lot from this. The scheme has generated revenue 19 times the amount allocated in the last 4 years.
Revenue growth increased from smartphones
According to industry body India Cellular and Electronics Association (ICEA), the smartphone industry contributed Rs 1.10 lakh crore to the government exchequer. Goods worth Rs 12.55 lakh crore have been produced between FY 2021 and FY 2024. During this period, Rs 5,800 crore was allocated by the government under the PLI scheme, while in return for the smartphone scheme, the government got a revenue growth of Rs 1,04,200 crore. This has been revealed by the report of the Ministry of Finance and Ministry of Electronics and IT (MeitY).
Big benefit to the government treasury
The industry has paid Rs 48,000 crore duty on mobile parts and components in the last four years, while the government has received Rs 62,000 crore from GST. The government announced the PLI scheme in April 2020 and with it the GST rate on mobile phones was increased from 12 to 18 percent. This has brought huge benefit to the government treasury.
Huge jump in employment and exports due to PLI scheme
The smartphone scheme has brought large-scale investment in the country. Also, employment has been created on a large scale with smartphone production and export. Along with iPhone makers Foxconn, Tata (Wistron) and Pegatron, Samsung has benefited the most from the PLI scheme. About 3 lakh direct jobs are being provided by the mobile industry. Also 6 lakh indirect jobs are being provided. Smartphone exports have increased due to PLI scheme. India has moved from 23rd to third place in terms of smartphone exports. Smartphones are exported the most from India to the US.
What are the main benefits of the Production Linked Initiative (PLI) scheme for small and medium enterprises in India?
Interview between Time.news Editor and an Industry Expert on the Production Linked Initiative (PLI) Scheme
Editor: Good day and welcome to Time.news. Today, we’re diving into the Production Linked Initiative—or PLI scheme—an ambitious policy started by the Central Government. To unpack this further, we have with us Dr. Ananya Mehta, an expert in economic policy and industrial growth. Dr. Mehta, thank you for joining us.
Dr. Mehta: Thank you for having me! It’s a pleasure to be here.
Editor: Let’s start with the basics. The PLI scheme faced a lot of criticism when it was announced. Can you shed some light on the initial objections and the rationale behind them?
Dr. Mehta: Certainly. The initial criticism primarily stemmed from concerns that the PLI scheme would disproportionately benefit large businesses, particularly in sectors like electronics and smartphones. Skeptics argued that instead of helping small and medium enterprises, the focus on big corporations would create an uneven playing field. There was a fear that taxpayers’ money was being allocated to support already financially strong entities.
Editor: That’s a valid concern. But recently, we’ve seen some positive outcomes from the PLI scheme, particularly in the smartphone sector. Can you elaborate on how this has changed public perception?
Dr. Mehta: Absolutely. Over the past four years, the PLI scheme has shown remarkable results. One of the most significant aspects is the increase in government revenue, which has reportedly grown 19 times the amount initially allocated. This revenue surge is largely propelled by the smartphone manufacturing and exports sector, which has become a revenue bonanza for the government. As these numbers come to light, many critics have begun to acknowledge the scheme’s potential to enhance domestic manufacturing and, by extension, economic growth.
Editor: That’s impressive! How has this revenue growth affected the broader economy in India?
Dr. Mehta: The revenue growth from the smartphone sector is indicative of a broader trend: increasing domestic production capacities. It’s not just about revenue; it’s also about job creation, technological advancements, and reducing import dependency. As companies ramp up production in India, we see a ripple effect throughout the supply chain. Employment opportunities rise, and local industries, including component manufacturers, often experience growth alongside larger firms.
Editor: So, would you say the PLI scheme has achieved its intended goal of boosting local manufacturing?
Dr. Mehta: To a significant extent, yes. The scheme has catalyzed investment in manufacturing capabilities, leading to technological transfers and upskilling of the workforce. While there are areas where it can be improved—like ensuring smaller firms have access to resources—it’s undeniable that the PLI has been a stepping stone toward making India a manufacturing hub, especially in electronics and smartphones.
Editor: It sounds like we’re just at the beginning of the potential benefits of the PLI scheme. What recommendations would you give to ensure that the positive trajectory continues?
Dr. Mehta: I would recommend a dual approach. First, the government should focus on enhancing support structures for small and medium enterprises. This includes easier access to financing and capacity-building programs. Secondly, consistent monitoring and evaluation of the scheme’s outcomes are crucial. Engaging with stakeholders, including smaller manufacturers, will ensure the policy remains inclusive and beneficial for a wider array of businesses.
Editor: Thank you, Dr. Mehta. Your insights are invaluable as we navigate this conversation about economic policy and sustainable growth. It’s an exciting time for India’s manufacturing sector indeed!
Dr. Mehta: Thank you for having me! It’s an important conversation, and I look forward to seeing how the PLI scheme evolves in the coming years.
Editor: Thank you to our viewers for tuning in. Stay tuned for more discussions on pivotal topics shaping our economy and society. Until next time!