India Government officials stated that the $23 billion program, the Production-Linked Initiative (PLI) scheme, will be canceled. No sector other than the original 14 pilot sectors will be included, and the production deadlines will also not be extended.
India tried to use this scheme to boost its domestic manufacturing. Its goal was to increase the share of manufacturing in the economy to 25% by 2025. However, since the scheme’s introduction, the share of the economy has decreased from 15.4% to 14.3%.
According to the public records, approximately 750 companies, including Foxconn and Reliance Industries, applied to the scheme. They were promised cash payouts if they increased the individual production to the target by the deadline.
However, many failed to accomplish and those that did received the disbursement late. According to the commerce ministry’s data, participating companies managed to produce $151.93 billion worth of goods, or 37% of the scheme’s goal. Meanwhile, India issued less than 8% of the allocated funds, or only $1.73 billion.
Still, pharmaceuticals and mobile-phone manufacturing did see rapid growth. In the 2023-24 fiscal year, India produced mobiles at a total value of $49 billion, a 63% increase from 2020-2021, and exported $27.85 billion worth of pharmaceuticals, nearly doubled from a decade ago.
Reuters also found an analysis stating the production in the food-sector exceeded the target despite some firms in the sector not receiving the subsidy.
The officials also confirmed that despite the end of the program, India is planning alternatives to boost its manufacturing. However, India trade expert, Biswajit Dhar, stated that the nation might have missed its chance to attract foreign investment. There is no expectation for anything else to succeed.
Moreover, India’s manufacturing now faces the stalling as the nation attempts to handle Donald Trump’s trade war. Dhar stated that the export sector is facing the difficulty from the reciprocal tariff the US president threatened to impose. The tariff protection is going to be slashed.
