Mumbai, March 23 (Agency) India is expected to witness a potential capital expenditure of around Rs 2.5-3 lakh crore under the ambitious production linked incentive (PLI) programme, says agency Crisil Ratings. According to it, the capex under the scheme will account for 13-15 per cent of average annual investment spending in key industrial sectors over the next three to four years. “The implementation of the PLI scheme will lead to a potential capital expenditure of Rs 2.5-3 lakh crore over the scheme period and will account for 13-15 per cent of average annual investment spending in key industrial sectors over the next three-four years,” it said. The scheme, introduced in March 2020, has been announced for 15 sectors, involving government incentives to the tune Rs 1.93 lakh crore.
Of this, 50-60 per cent is to be spent on sectors with domestic manufacturing and export focus, and the rest on import localisation. “This could translate into an incremental revenue addition of Rs 30-35 lakh crore over the scheme period,” the ratings agency said. Crisil noted that the scheme will have many firsts in terms of bringing integration across supply chains, reducing import dependencies and propelling exports. “PLI is now poised for rapid on-the-ground execution, with almost 60 per cent of the capex approved already and major spending set to occur over fiscals 2023-26,” it said. Of the approvals, 20 per cent have been received by global multinationals and the rest by domestic players. Also, 50 per cent of the bidders are large in terms of revenue, while the rest are medium and small players. While the capex in mobile, pharma and telecom has already kicked off, that in capital-intensive sectors such as automobile and solar photovoltaics which form 70 per cent of the committed investment, will kick off from April 2022. The scheme has received interest from over 900 players across sectors, of which 350 have got approval so far, it noted. “PLI will spur green investments in India, with 55 per cent of the scheme expected to be green, in sectors such as auto for electric vehicles/fuel cell electric vehicles, solar photovoltaics, and automotive cell company batteries,” Crisil Research Director Hetal Gandhi said.
The agency noted that these investments will ensure development of the entire ecosystem even long after PLI fades. Apart from supply-chain integration, PLI will aid exports, too, the agency said adding that of the 15 sectors, nine show an export potential, ranging from 20-80 per cent of the incremental revenue generated. “This, in turn, can create an annual export potential of Rs 2 lakh crore, or 6 per cent of the total exports of calendar 2021,” it said. Sectors that could benefit from exports include mobiles, pharma, food processing, IT hardware, white goods and specialty steel.