InvestorQ : Has the government given a latest push to the product linked incentives scheme or PLI? Also, do you see another stimulus in the Indian market announced soon?
diksha shah made post

Has the government given a latest push to the product linked incentives scheme or PLI? Also, do you see another stimulus in the Indian market announced soon?

Answer
image
8 months ago
Follow

There are two questions that you have raised here and let me answer them both separately. Let me first take up the issue of the product linked incentives or PLI announcements made by the government recently.

Firstly, the government is now going aggressive on its plan to make India a manufacturing hub for the world and it appears to have been propped up by the outcome of the Bihar elections and the series of by-elections across the various states.

In a unique move on Wednesday, the government agreed to extend the product linked incentives or PLI scheme to 10 industries to encourage global players. The idea is to empower and incentivize them to set up manufacturing units in India and export to to the global markets from India.

The product linked incentives or PLI scheme will offer incentives for five years to such manufacturers in products like advanced chemistry cell batteries, electronics, automobiles, ancillaries, pharmaceuticals & healthcare products, telecom & networking products, textiles, solar modules, food products and specialty steel.

You would recollect that the government had already approved an outlay of Rs.145,000 crore towards this PLI scheme and now the finer details are getting out. There are more benefits like lower income tax rates for new units, state-specific incentives and customs duty benefits that are intended to make an attractive manufacturing hub.

Secondly, let me come to the issue of the next stimulus package which is being talked about ever since a Biden victory in the US. Now with the outcome of the Bihar elections, that almost appears to be confirmed that India will go ahead with another stimulus.

As early as Diwali, the Indian government may be planning a fresh $20 billion round of stimulus for the Indian economy. This is more so because the growth traction is visible in the second quarter numbers and macro numbers. This is apart from the PLI scheme.

The stimulus is likely to be a combination of monetary and fiscal incentives for businesses and for households. In fact, it is expected that this time the focus will be on stressed sectors like tourism, hospitality and aviation, which are among the worst affected.

With the COVID afflictions also under control, the government wants to give a big push to job creation. The latest quarter has shown the resilience of the Indian corporates and one more stimulus to the stressed sectors can do wonders, even if means pressure on fiscal deficit.

1 Views