+
PLI Scheme draws ₹ 11.5 trillion FDI
POWER & RENEWABLE ENERGY

PLI Scheme draws ₹ 11.5 trillion FDI

While we get clarity on whether the government chooses to battle the retrospective tax against the order given by the Supreme Court in favour of the struggling Vodafone, India’s PLI scheme has made great headway in attracting FDI for manufacturing in India.

India’s disinvestment target for 2020-21 is ₹ 2.1 trillion against last year’s achievement of ₹ 34.85 billion, against the 2019-20 target of ₹ 1.05 trillion. Divestment crossed ₹ 1 trillion only in 2017-18 in the past 10 years—₹ 37 billion from this was received by selling shares internally among PSUs; ONGC bought the Government’s 51 per cent stake for cash. The second highest divestment was in 2018-19 of ₹80 billion. Government shareholding in three blue chips that are part of the CPSE ETF—namely NTPC, BEL and PowerGrid—has reached the 51 per cent threshold, thus making further stake dilution impossible. It may have to replace these stocks with other blue chips where government shareholding is comfortably above the 51 per cent threshold. So, while FY 2018 and FY 2019 did send out a good signal for divestment, FY 2020 has slipped. The Government extended the dates for Expressions of Interest for its prized refinery BPCL for the fourth time to November 16. Saudi Aramco has not indicated any interest in participating and Rosneft too seems disinterested as low oil prices and weak fuel demand curb investment plans. Tarun Bajaj, Secretary, Department of Company Affairs, conceded that the target of ₹ 2.1 trillion would not be achievable. The government retained its ₹ 12 trillion borrowing limit for the full year, of which ₹ 4.34 trillion will be borrowed in the second half of the fiscal. Rather than try to get best prices for shares when they reach their peaks, the Government must go about its divestment plan as per target.

India’s other means of raising economic spirits could be to engage high-level FDI. Here, the country has managed to attract $ 20 billion during April-June 2020 during its lockdown. Google’s parent Alphabet’s CEO Sundar Pichai announced a $ 10 billion investment in 'Digital India' in the next five to seven years. Another major announcement during this period was by US-based Facebook, which said it would put in $ 5.7 billion in Reliance Jio platforms. Saudi Arabia’s Public Investment Fund has also announced plans to put in $ 1.6 billion in Reliance’s Jio. Another substantial investment of $ 1 billion was announced in recent days by Taiwanese electronics company Foxconn. Elon Musk has also announced on twitter that Tesla cars will make their debut into India in 2021.

Besides these, chipmaker Qualcomm’s investor arm Qualcomm Ventures, consumer electronics major Thomson, Japan’s Hitachi, South Korea’s Kia Motors and Samsung, auto parts company Hyundai Mobis, SGS (which partnered Amazon to open its first accreditation testing lab in India), Japanese electronics company Tsuzuki (which has opened a brand-new plant at Reliance's Model Economic Township in Jhajjar in Haryana, are all in the fray to benefit from the Ministry of Electronics and Information Technology’s (MeitY) $ 6.65 billion production-linked incentive (PLI) scheme to make mobile phones and certain other specified electronic components. This scheme would give incentives of 4-6 per cent to companies that manufacture mobile phones and other electronic components. The PLI scheme will be active for five years with FY2019-20 considered as the base year for calculation of incentives. This means all investments and incremental sales registered after FY20 shall be considered while computing the incentive to be given to each company. A total of 22 companies have filed their application under the Production Linked Incentive Scheme (PLI scheme) with production worth ₹11.50 trillion and exports valuing ₹7 trillion are expected over next five years as per Ravi Shankar Prasad, Minister of Electronics and Information Technology.

This is likely to set the stage for India to become a major production hub for exporting mobile phones. Foxconn, Wistron and Pegatron, the global contract manufacturers for Apple, have applied for the scheme and have committed to investing $ 900 million. Foxconn has applied to invest about ₹ 40 billion, while Wistron and Pegatron have committed to invest close to ₹ 13 billion and ₹ 12 billion, respectively, under the PLI plan. While Foxconn, Pegatron and Wistron make devices for companies other than Apple globally, Wistron's arm in India currently assembles only iPhones. Among local players, Lava, Dixon Technologies and Karbonn have applied so far. Samsung and Flextronics are also in the fray. The scheme closed on July 31. Ten companies have filed applications under the Specified Electronic Components Segment which include AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, Vitesco and Neolync. The scheme will generate around three lakh direct employment opportunities in next five years along with creation of additional indirect employment of nearly three times the direct employment as per MeITY.

Given the success of the PLI scheme, the Government should not lose any time and extend this to other sectors which can help secure production within India for those items where we are currently relying on imports. However, the scheme is currently stuck in some bureaucratic protocol and should be cleared soon. PLI 2.0 should be rolled out as a festive offering. Infusion of FDI is our only short to medium-term solution to capex and employment generation from the private sector.

While we get clarity on whether the government chooses to battle the retrospective tax against the order given by the Supreme Court in favour of the struggling Vodafone, India’s PLI scheme has made great headway in attracting FDI for manufacturing in India. India’s disinvestment target for 2020-21 is ₹ 2.1 trillion against last year’s achievement of ₹ 34.85 billion, against the 2019-20 target of ₹ 1.05 trillion. Divestment crossed ₹ 1 trillion only in 2017-18 in the past 10 years—₹ 37 billion from this was received by selling shares internally among PSUs; ONGC bought the Government’s 51 per cent stake for cash. The second highest divestment was in 2018-19 of ₹80 billion. Government shareholding in three blue chips that are part of the CPSE ETF—namely NTPC, BEL and PowerGrid—has reached the 51 per cent threshold, thus making further stake dilution impossible. It may have to replace these stocks with other blue chips where government shareholding is comfortably above the 51 per cent threshold. So, while FY 2018 and FY 2019 did send out a good signal for divestment, FY 2020 has slipped. The Government extended the dates for Expressions of Interest for its prized refinery BPCL for the fourth time to November 16. Saudi Aramco has not indicated any interest in participating and Rosneft too seems disinterested as low oil prices and weak fuel demand curb investment plans. Tarun Bajaj, Secretary, Department of Company Affairs, conceded that the target of ₹ 2.1 trillion would not be achievable. The government retained its ₹ 12 trillion borrowing limit for the full year, of which ₹ 4.34 trillion will be borrowed in the second half of the fiscal. Rather than try to get best prices for shares when they reach their peaks, the Government must go about its divestment plan as per target. India’s other means of raising economic spirits could be to engage high-level FDI. Here, the country has managed to attract $ 20 billion during April-June 2020 during its lockdown. Google’s parent Alphabet’s CEO Sundar Pichai announced a $ 10 billion investment in 'Digital India' in the next five to seven years. Another major announcement during this period was by US-based Facebook, which said it would put in $ 5.7 billion in Reliance Jio platforms. Saudi Arabia’s Public Investment Fund has also announced plans to put in $ 1.6 billion in Reliance’s Jio. Another substantial investment of $ 1 billion was announced in recent days by Taiwanese electronics company Foxconn. Elon Musk has also announced on twitter that Tesla cars will make their debut into India in 2021. Besides these, chipmaker Qualcomm’s investor arm Qualcomm Ventures, consumer electronics major Thomson, Japan’s Hitachi, South Korea’s Kia Motors and Samsung, auto parts company Hyundai Mobis, SGS (which partnered Amazon to open its first accreditation testing lab in India), Japanese electronics company Tsuzuki (which has opened a brand-new plant at Reliance's Model Economic Township in Jhajjar in Haryana, are all in the fray to benefit from the Ministry of Electronics and Information Technology’s (MeitY) $ 6.65 billion production-linked incentive (PLI) scheme to make mobile phones and certain other specified electronic components. This scheme would give incentives of 4-6 per cent to companies that manufacture mobile phones and other electronic components. The PLI scheme will be active for five years with FY2019-20 considered as the base year for calculation of incentives. This means all investments and incremental sales registered after FY20 shall be considered while computing the incentive to be given to each company. A total of 22 companies have filed their application under the Production Linked Incentive Scheme (PLI scheme) with production worth ₹11.50 trillion and exports valuing ₹7 trillion are expected over next five years as per Ravi Shankar Prasad, Minister of Electronics and Information Technology. This is likely to set the stage for India to become a major production hub for exporting mobile phones. Foxconn, Wistron and Pegatron, the global contract manufacturers for Apple, have applied for the scheme and have committed to investing $ 900 million. Foxconn has applied to invest about ₹ 40 billion, while Wistron and Pegatron have committed to invest close to ₹ 13 billion and ₹ 12 billion, respectively, under the PLI plan. While Foxconn, Pegatron and Wistron make devices for companies other than Apple globally, Wistron's arm in India currently assembles only iPhones. Among local players, Lava, Dixon Technologies and Karbonn have applied so far. Samsung and Flextronics are also in the fray. The scheme closed on July 31. Ten companies have filed applications under the Specified Electronic Components Segment which include AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, Vitesco and Neolync. The scheme will generate around three lakh direct employment opportunities in next five years along with creation of additional indirect employment of nearly three times the direct employment as per MeITY. Given the success of the PLI scheme, the Government should not lose any time and extend this to other sectors which can help secure production within India for those items where we are currently relying on imports. However, the scheme is currently stuck in some bureaucratic protocol and should be cleared soon. PLI 2.0 should be rolled out as a festive offering. Infusion of FDI is our only short to medium-term solution to capex and employment generation from the private sector.

Next Story
Infrastructure Transport

Rs 19.5 Billion Meerut–Nazibabad Rail Electrification Complete

The Rs 19.5 billion railway electrification of the Meerut–Nazibabad section has been completed, marking a major step towards improving connectivity in northern India. The project covers 132 kilometres of track and is expected to enhance operational efficiency while reducing travel time and fuel costs.Officials from the Ministry of Railways said the electrification will enable faster, more reliable train services and contribute to reduced carbon emissions. The initiative aligns with the government’s broader goal of achieving 100 per cent electrification of India’s railway network by 2030...

Next Story
Infrastructure Urban

AU Small Finance Bank Secures RBI Approval For Universal Bank

AU Small Finance Bank has received approval from the Reserve Bank of India (RBI) to transition into a universal bank. The move will allow the Jaipur-based lender to expand its range of financial services and compete directly with larger commercial banks.Founded in 1996 as a non-banking finance company, AU Small Finance Bank became a small finance bank in 2017. The transition to a universal bank will enable it to offer a broader portfolio, including enhanced corporate banking, treasury operations, and new retail products.Managing Director and CEO Sanjay Agarwal said the approval marks a signifi..

Next Story
Building Material

India Cements Q1 Loss Narrows To Rs 276 Million On Higher Sales

India Cements Ltd has reported a consolidated net loss of Rs 276 million for the quarter ended June 2025, narrowing from a loss of Rs 831 million a year earlier. Consolidated revenue from operations rose 20 per cent year-on-year to Rs 17.9 billion from Rs 14.9 billion.The company attributed the improvement to higher sales volumes and better price realisations, which offset some of the impact of elevated fuel and raw material costs. EBITDA turned positive at Rs 1.1 billion, compared with a loss in the same period last year.Vice Chairman and Managing Director N. Srinivasan said the company will ..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?