Budget 2024: PLI scheme may be tweaked to boost jobs, local production

The Production-Linked Incentive (PLI) scheme, that aims to boost domestic manufacturing and private investments, is likely to see a revamp with discussions on to include more sectors, especially those linked to employment generation in its ambit.

According to sources, inputs from several ministries have been sought about the current status of implementation of the PLI schemes in each sector as well as further requirements.

The thinking in the government is that the scheme should be tweaked to include more labour-intensive sectors as well as those that have linkages to micro, small and medium enterprises. The objective is to increase employment generation as well as give a further boost to domestic manufacturing.

“PLI schemes can act as accelerators to good quality job creation while giving a boost to domestic manufacturing. Sectors that have a local focus and can generate employment are being looked into for the purpose,” sources said, adding that decision on this may be announced in the Union Budget 2024-25.

The issue of further extending the PLI scheme to other sectors such as leather, footwear and handicrafts have also been taken up during pre-Budget consultations of Finance Minister Nirmala Sitharaman with industry chambers as well as economists. Industry chamber PHDCCI has also submitted that the PLI scheme should be expanded beyond the 14 sectors to include medicinal plants, handicrafts, leather and footwear, gems and jewellery, and the space sector, among others.

Sources indicated that discussions have also focussed on a cut in corporate tax rates for new manufacturing units, however, this may not be done for now. 

The Centre had earlier offered a concessional corporate tax rate of 15% to companies setting up new manufacturing units incorporated after October 1, 2019, up to March 31, 2024. This benefit was however, not extended in the Interim Budget and sources indicated that for now the priority would be to boost domestic manufacturing and job creation through the PLI scheme.

The PLI scheme was launched in 2020 and expanded to 14 schemes with an outlay of Rs 1.97 lakh crore to create national manufacturing champions and generate employment opportunities for the country’s youth. By November 2023, it had registered investments of over Rs 1.03 lakh crore till November 2023 and disbursed Rs 4,415 crore of incentives.