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Business Mahindra fights
businesstoday.in confidence up for identity
May 2, 2021 `100
OC
How India Can Become The
Factory to the World
WHaT IndusTry musT do WITH THe neW produCTIon lInked
InCenTIves To make IndIa a gloBal manufaCTurIng HuB
We tell the story Not the moral of the story
From the Editor
http://www.businesstoday.in
Quest To Be The World’s Factory Chairman & Editor-in-Chief: aroon purie
Vice Chairperson: Kalli purie
Group Chief Executive Officer: Dinesh Bhatia
Group Editorial Director: Raj Chengappa
Chief Executive Officer: Manoj Sharma
T
Editor: Rajeev Dubey
he Production Linked Incentive (PLI) Scheme — India’s valiant Group Creative Editor: Nilanjan Das
Group Photo Editor: Bandeep Singh
answer to domestic and foreign manufacturers’ eternal gripe that Executive Editor: anand adhikari
producing in India was hopelessly unviable because of high taxes, Deputy Editor: ajita Shashidhar
high cost of logistics, finance, land, power and an endless list thereafter — special projects and events
Senior Editor: anup Jayaram
was introduced for mobile manufacturers in 2020.
correspondents
The Government of India’s commitment to provide cash incentives up Senior Editors: p.B. Jayakumar, Nevin John,
Joe C. Mathew, Dipak Mondal, Manu Kaushik,
to 4-6 per cent of revenue from incremental local manufacturing aimed at Sumant Banerji
import substitution got such an excitable response from companies that Associate Editor: Nidhi Singal
Special Correspondent: Vidya S.
the Centre made mobile PLI the template to launch it in 12 other sectors.
consulting editor: Rukmini Rao
With total incentives committed going as high as `1.99 lakh crore over five
years, PLIs now rival some of the biggest Government of India outlays such research
Principal Research Analysts: Niti Kiran, Shivani Sharma
as `3.05 lakh crore for reforms-based result-linked power distribution sec- copy desk
tor scheme and the `1.4 lakh-crore Swachh Bharat Mission (Urban). Senior Editor: Mahesh Jagota
Associate Editor: Samali Basu Guha
Despite its obvious advantages of import substitution — saving pre- Copy Editor: aprajita Sharma
cious forex — PLI will still have to deliver projects on the ground to be con- photography
sidered a success. Early birds in mobile manufacturing such as Samsung, Deputy Chief Photographers:
Yasir Iqbal
Apple’s contractors and Lava have committed investments worth `11,000 Principal Photographer: Rajwant Singh Rawat
crore. But surprisingly no one has yet made an incentive disbursement art
Deputy Art Director: amit Sharma
claim. How this plays out in other sectors will be the true litmus test of PLI. Assistant Art Director: Raj Verma
In this issue’s cover story, Joe C.Mathew and Nidhi Singal examine India’s production
quest to be the world’s factory. What works! What doesn’t! Chief of Production: Harish aggarwal
Senior Production Coordinator: Narendra Singh
From one bright spark to another. Right through the Covid onslaught Associate Chief Coordinator: Rajesh Verma
in 2020, India’s IT firms remained the cynosure of all eyes for their con- library
Assistant Librarian: Satbir Singh
trarian growth among shrinking economies at home and abroad. NASS-
COM expects Indian IT services segment to grow 2.7 per cent year-on- Associate Publisher (Impact): Vidya Menon
year to reach $99 billion in 2020/21, when India’s GDP is set to shrink 8 per impact team
Senior General Manager: Jitendra Lad (West)
cent. Rukmini Rao takes you through Indian IT firms’ innovations drive General Manager: Upendra Singh (Bangalore)
Deputy General Manager: Indranil Chatterjee (East)
right through the pandemic. The most notable of those being reskilling
of employees. Large firms such as TCS, Infosys and Wipro, among others, Marketing: Vivek Malhotra, Group Chief Marketing Officer
embarked on a massive reskilling drive to prepare the workforce for a pan- Newsstand Sales: Deepak Bhatt, Senior General Manager
(National Sales); Vipin Bagga, General Manager (Operations);
demic-ridden world. TCS alone trained 366,000 employees in new tech- Rajeev Gandhi, Deputy General Manager (North),
Syed asif Saleem, Regional Sales Manager (West),
nologies, and over 444,000 in Agile methodologies (software develop- S. paramasivam, Deputy Regional Sales Manager (South),
piyush Ranjan Das, Senior Sales Manager (East)
ment methodologies focused on collaboration between cross-functional
teams).
Meanwhile, with new foreign investment opportunities opening up, Vol. 30, No. 9, for the fortnight April 19, 2021 to
May 2, 2021. Released on April 19, 2021.
the ever-hungry, ever-innovative Indian investors have got hooked on to Editorial Office: India Today Mediaplex, FC 8, Sector 16/A, Film City, Noida-201301; Tel:
0120-4807100; Fax: 0120-4807150 Advertising Office (Gurgaon): A1-A2, Enkay Centre,
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4948400; Fax: 0124-4030919; Mumbai: 1201, 12th Floor, Tower 2 A, One Indiabulls Centre
companies, are listed in the US with the objective of acquiring private (Jupiter Mills), S.B. Marg, Lower Parel (West), Mumbai-400013; Tel: 022-66063355; Fax: 022-
66063226; Chennai: 5th Floor, Main Building No. 443, Guna Complex, Anna Salai,
firms. They are allowed up to two years to acquire and merge a company. Teynampet, Chennai-600018; Tel: 044-28478525; Fax: 044-24361942; Bangalore: 202-204
Richmond Towers, 2nd Floor, 12, Richmond Road, Bangalore-560025; Tel: 080-22212448,
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033-22825398, 033-22827726, 033-22821922; Fax: 033-22827254; Hyderabad: 6-3-885/7/B,
firms. SPACs are the fastest and most convenient way to list a company Raj Bhawan Road, Somajiguda, Hyderabad-500082; Tel: 040-23401657, 040-23400479;
Ahmedabad: 2nd Floor, 2C, Surya Rath Building, Behind White House, Panchwati, Off: C.G.
without going through the prolonged IPO route. Investors have caught on Road, Ahmedabad-380006; Tel: 079-6560393, 079-6560929; Fax: 079-6565293; Kochi:
Karakkatt Road, Kochi-682016; Tel: 0484-2377057, 0484-2377058; Fax: 0484-370962
to the trend with SPACs accounting for up to 5 per cent of AUM on global Subscriptions: For assistance contact Customer Care, India Today Group, C-9, Sector 10,
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lines); Fax: 0120-4078080; E-mail: wecarebg@intoday.com
cently signed an agreement with the US-listed SPAC RMG Acquisition Sales: General Manager Sales, Living Media India Ltd, C-9, Sector 10,
Noida (U.P.) - 201301;
Corporation II to list on Nasdaq at a valuation of $8 billion. Flipkart and Tel: 0120-4019500; Fax: 0120-4019664 © 1998 Living Media India Ltd.
All rights reserved throughout the world. Reproduction in any manner is prohibited.
Grofers are also looking to go public via Printed & published by Manoj Sharma on behalf of Living Media India Limited.
Printed at Thomson Press India Limited, 18-35, Milestone, Delhi-Mathura Road,
this route. India doesn’t allow SPACs just Faridabad-121007, (Haryana). Published at F-26, First Floor, Connaught Place,
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yet, but Sebi has set up a committee to Editor: Rajeev Dubey
Business Today does not take responsibility for returning unsolicited
discuss introducing the option for Indian publication material.
All disputes are subject to the exclusive jurisdiction of competent
investors as well. Aprajita Sharma catches courts and forums in Delhi/New Delhi only.
the Indian investor frenzy around SPACs.
For reprint rights and syndication enquiries, contact
rajeev.dubey@intoday.com syndications@intoday.com or call +91-120-4078000
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@rajeevdubey
May 2, 2021 Cover by
Volume 30, Number 9 NILANJAN DAS
22
10
COVER STORY
The Point
Banks Get a Breather How India
Can Become
NPA ratio of scheduled
commercial banks sees a sharp
The Factory
improvement in Q3, though
income growth dips,
mainly due to the economic
slowdown
To the World
WHAT INDUSTRY MUST
DO WITH THE NEW
PRODUCTION LINKED
12 INCENTIVES TO MAKE
INDIA A GLOBAL
Assam Grew Fastest MANUFACTURING HUB
Among Poll-Bound
States in Last
Four Years
18
Economy
Dead Cat Bounce?
The latest Business Today
Business Confidence Index
shows slight improvement in
overall sentiment despite the
pessimism around economic and
business issues
6 Business Today 2 May 2021
Content
54
Corporate
A Rough Ride
once the leader in SuVs,
Mahindra has lost its crown.
The company is resetting its
gameplan to stay clear of me-
too products, replacing them
with vehicles intrinsic to its
dNa. Can it rise again?
72
36
Money Today
Economy
Playing It Safe
Betting On BoT how to minimise interest rate,
worsening NhaI finances credit and liquidity risks in
are forcing the government to go debt funds
back to the build-operate-transfer
model for road projects
76
40 Piping Hot From
66 Wall Street
Finance Indians are looking to invest
Technology in new-age companies in the
uS via SPaCs; Sebi considers
Exiting The Easy local options
Money Circle The Location
The RBI adopted multiple regulatory Advantage
forbearance measures and ultra- how location mapping
loose monetary policy to counter services are helping
economic headwinds. Now it has to businesses and
work out an exit roadmap governments work better
80
Network
businesstoday.in Turakhia’s Travel
Diary
Serial entrepreneur Bhavin
Turakhia, who saw successful exits
such as Resellerclub and BigRock,
takes his hike breaks seriously
STay CoNNeCTed wITh uS oN
www.facebook.com/BusinessToday@BT_India
82
An Feature
Best Advice I Ever Got
From time to time, you will see pages titled “Focus”, “An
Impact Feature”, or “Advertorial” in Business Today. These
are no different from an advertisement and the magazine’s “Find your core strengths
editorial staff is not involved in their creation in any way. and focus on them”
Chandru Kalro
8 Business Today 2 May 2021The Point
…as
.1
total 10
Interest
4
Income
9.
Dips Income
0.6%... Falls 1.7%
InTereST
Income
(Y-o-Y %)
7.5
InTereST Big relief
expenSeS on Bad
5. 5
(Y-o-Y %)
Loans Front
4.8
3. 48
3. 46
.8
12
3.16
3 .2
roa also
3 .9
9. 10
.3
hints at
11
recovery
8.7
7
reTurn on
5.6
4 . 2 5.9
aSSeTS (%)
ScBs pSBs pVBs
0.46
0.63
0.33
0.26
0.01
ToTal pSBs pVBs ScBs ScBs pSBs pVBs
Income
-0.1
coST To Income GroSS npa
-0.28
-0.3
- 0.19
of ScBs raTIo (%) raTIo (%)
(lakh crore)
-0.6
Costs ScBs: Scheduled commercIal BankS
pSBs: puBlIc SecTor BankS
ToTal Fall
pVBs: prIVaTe BankS
Income
relative to
-1.7
of ScBs
(Y-o-Y %) Income
Banks Get
a Breather
Q3FY19
Q3FY20
Q3FY21
-1
0.
941
. 8
44 45
.9 . 4
46
48.
47
.4
250
50.8
55.3
4.1
percenTaGe poInTS
nPa ratio of scheduled commercial Improvement in
banks sees a sharp improvement in Q3, gross npa ratio of public
though income growth dips, sector banks from 12.8%
mainly due to the economic slowdown in third quarter of fY19 to
8.7% in third
By shIVanI sharMa quarter of fY21
Graphics by tanMoy ChakraBortyThe Point
Assam Grew
î Four states and one Union Territory are
voting in March-April to elect new assemblies.
Of these, Assam’s economy grew the fastest
Fastest Among at 8.6 per cent a year during the four-year
period to FY20. It was followed by Tamil Nadu
Poll-Bound
(8 per cent), West Bengal (6.7%), Puducherry
(6.7 per cent) and Kerala (6.4 per cent)
î Of these, Tamil Nadu’s economy is the
States
largest (3rd largest in India), followed by West
Bengal (6th), Kerala (11th), Assam (17th) and
Puducherry (26th)
219
222
8.6
3
6.7
22
Tamil nadu
6. 3
6.7
west Bengal
8
116
Kerala
assam
36
Puducherry
91
25
36
9. 6.
1 2
24
4.
Pe r
1.7
2
0.
P cA
GSd h inc PitA
22
2
w t
Gr o
ra g e ( in '0ome
a ve 00 d
(%, -20) F Y20 `, eB
in y F Y 16
r e o m 20
) (F t/G
Y2 S
4 .8
A n Y 1) dP
Sh o n F
0.3 c
e )i 6. 2
8 (%
3. 5 Unem r Ate
8. 2 4 .3
Crore)
(` lakh my
(%) in
13.5
ec o n F
S ize o
Ploy
1
o
3.4
in F Y 2
19.4
Feb'2
m e nt
5.8
1
Source: Care Ratings
Bank Credit CRedIT GRowTh had
SlIPPed Below 7 Per
Growth Dips Outstanding Credit
by sCheduled
cent For the FirSt time
Since demonetiSAtion
In MaRCh 2020. IT haS noT
In Spite of
COmmerCial banks
(Y-o-Y % Change) CRoSSed ThIS level In
anY MonTh SInCe Then
20
Recovery 15
Growth in outstanding non-
food credit given by scheduled 10 Outstanding
commercial banks (SCBs) fell from credit
8.5 per cent in January 2020 to to industry
6.6 per cent in February 2021. This 5 fell
despite the economy coming out 0.2 per cent
of the contraction phase in the 0
third quarter of FY21
Total non-food Services -5
Jan-20 Feb-21
Industry Personal Source: RBI
12 Business Today 2 May 2021Air Cargo 276
245
Traffic 259
Jan-20 258
268 Feb-21
Oct-20 Dec-20
Feb-20 239
Dips 8.5%
Sep-20
244 245
210 192 Nov-20 Jan-21
in February Mar-20 Jul-20
204
Aug-20
'000 tonnes
163
Jun-20
Total air cargo traffic
fell 8.5 per cent YoY to Of this, domestic cargo
245 thousand tonnes in 95 traffic declined 6.6 per cent
February 2021 May-20 to 99.4 thousand tonnes. It
accounted for 40.6 per cent
of total cargo traffic during
the month
47
Apr-20
Source: CMIe
Mutual aum Of indian mf
industry
(`lakh crore)
FunD 35
28
auM HItS 21
ReCoRD 14
7
HIGH 0
Feb-20 Source: aMFI Feb-21
î Assets under
management (AUMs) of the
mutual fund industry rose
3.74 %
16.1 per cent (by `4.4 lakh
crore) YoY to all-time high of
`31.6 lakh crore in February
2021
î Equity schemes had the Month-on-month
largest number of folios at rise in total
68 per cent (6.59 crore). assets under
This was followed by hybrid management
schemes with 10 per cent in February 2021. Equity
share (93 lakh folios) and schemes' assets rose
debt with 9 per cent share 7.8% month-on-month
(88.9 lakh folios).
2 May 2021 Business Today 13The Point
Net SaleS of CV Quarterly Financial
PerFormance:
MakerS CroSS
commercial Vehicles
26.5
Pre-CoVid leVelS
net sales
(Y-o-Y % change)
î Domestic net sales of commercial
vehicle companies rose 26.5 per cent
in the December quarter to
-11.1
-16.2
cross pre-Covid levels. This despite
-32.8
sales either remaining lower or rising
-43.6
-49.6
only marginally compared with the
year-ago period
-82.5
î In February
2021, though, most
companies had net sales
20.4
reported double-digit (`'000 crore)
20.1
growth in sales,
15.9
14.6
13.3
mainly due to the low
15
base of the
year-ago period
3.6
Mar-20
Jun-19
Sep-19
Dec-19
Jun-20
Sep-20
Dec-20
Source: CMIE Industry Outlook
Two-fold Jump in EVs
Sold in Last Three Years
1,67,041
The demand for FY20
electric vehicles
69,012 (EVs) more than
FY18
doubled in three
years to FY20
1,43,358
FY19
The number of
registered EVs
jumped from The government has taken
69,012 in FY18 many steps for promotion of
to 167,041 in EVs which include reduction
FY20, as per in GST rate from 12 per cent
the e-vahan to 5 per cent
portal
Source: Lok Sabha reply
14 Business Today 2 May 2021Employment of Women
Takes a Hit in February
î In February 2021, the all-India employment
rate for women dipped below the February 2020
level of 8.6 per cent despite signs of economic
recovery in the fourth quarter of FY21
î It had dipped to an all-time low of 5.3 per cent
during the peak of the lockdown in April 2020
emPloyment rate oF Women in india (%)
all india urban rural
12 12 12
8.6 8.8 8.3 7.5 6.6 5.4 9.2 10.1 9.7
Feb-20 Jul-20 Feb-21
Feb-20 Jul-20 Feb-21 Feb-20 Aug-20 Feb-21
9 9 9
6 6 6
3 3 3
0 0 0
Feb-20 Feb-21 Feb-20 Feb-21 Feb-20 Feb-21
Source: CMIE
Cyber Security
î Cyber security incidents 11,58,208
jumped from 3,94,499 in 2019 2020
to 11,58,208 in 2020, according
Attacks Up Three
to information tracked by Indian
Computer Emergency Response
Team (CERT-In)
Times in 2020 î Such attacks had seen a
four-fold rise in 2018 and
89 per cent growth in 2019
î CERT-In is a national agency
for responding to cyber security
incidents as per provisions of
3,94,499
Section 70B of Information
Technology Act, 2000
2019
2,08,456
cyber security
incidents
2018
49,455
50,362
53,117
2017
2015
2016
2 May 2021 Business Today 15Dead
C
Boun at
ce?
T ay
T es Tod
a
h e l ess
n
T sI ess Ce
Bu sIn den )
Bu nfI (B CI ghT
Codex s slI enT
In ow vem l GR ILLU By
sh pro ral Ap S MA
HI TRA NU
Im ove enT e
cS TIO KA
C By US
In nTIme Th
N
mI TA B y HI
K
T o NM RA
se spI Ism on Oy j V
de ssIm d eCess
cH eR
AK MA
pe oun sIn
RA &
BO
ar d Bu
RT
y
an ue s
IssMild Recovery Macro
50.5
BCI Has Been Below 50 For Nine
Straight Quarters
Stress
Oct.-Dec.
2018 49.7 Inflation Rises
Jan.-Mar. 49.1 CPI Inflation (Y-oY %)
2019 Jul.-Sep. 48.6
2019 Oct.-Dec. 48.2
Jul.-Sep.
7.6
2019
7.3
6.7
6.9
6.2
7.2
6.6
6.7
6.3
2020
5.8
4.6
4.1
5
48.5
Apr.-Jun
2019 45.5
47 Jan.-Mar.
Apr.-Jun.
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
2021
46.3 2020
Jan.-Mar.
2020
Industrial production back
43.8
48.4
in negative zone
46.2
44.4
45.6
BCI by 44.8
47.5
48.7
43.7
Oct.-Dec.
10 2.2
43
Sector 2020
0
Light
-1.6
Industry -10
is Most Jul-Sep
-20
Upbeat 2020
Oct-Dec -30
2020
-40
IIP (Y-o-Y % change)
Services Light Heavy Jan-Mar
-50
industry engineering 2021
Apr ’20
-60
Jan-20 -57.3 Jan-21
BCI by
48.3
49.7
47.6
45.2
45.8
47.2
44.6
46.1
43.9
43.6
44.9
Exports Rise MoM
42.9
Size 50,000
Medium Imports Exports
Enterprises 40,000
(In $ million)
Are Most 30,000
Optimistic
20,000
10,000
Big Medium Small Micro
0
businesses businesses businesses businesses
Mar-20 Mar-21
Note: NSO has stated that it would not be appropriate to compare the IIP of April and May 2020 with indices of earlier months. The growth
rates in the tabulation are calculated by CMIE from the index numbers.
A
s India is going through that. Market research agency C fore The optimism, say experts, is also
the second wave of Co- quizzed 500 CEOs and chief financial driven by the fact that most large in-
vid-19 infections, so are officers across 12 cities for the survey. stitutions have given lofty growth
fears of uncertainty and Sujan Hajra, Chief Economist at projections for FY22. “Institutions
gloom. But the consistent improve- Anand Rathi Securities, says the big- like IMF, HSBC and RBI have pegged
ment in gross domestic product gest reason for the boost in sentiment GDP growth for FY22 at 10.5-12.5 per
(GDP) numbers over the past year is is GDP growth. “The economy has cent. It’s safe to assume that they have
playing a key role in shaping up sen- done well quarter after quarter,” he taken into account the possible risk
timents of corporate India, as high- says. GDP declined sharply by 23.9 per factors into their projections,” says
lighted in the latest Business Confi- cent in April-June 2020. In the next Sanjay Kumar, partner at Deloitte In-
dence Index (BCI) survey. quarter, the contraction was lower, at dia.
On a scale of 100, BCI jumped 7.5 per cent. This was followed by 0.4 The latest survey shows that the
to 45.5 in the January-March period per cent growth in the third quarter. respondents were optimistic about
compared to 43.8 in the previous Estimates peg fourth quarter growth nearly all parameters in January-
quarter and 48.2 in the quarter before at 2-3 per cent. March quarter as compared to the
2 May 2021 Business Today 19Economy – Business Confidence Index
previous quarter (October-December).
Take overall economic conditions. On
A Tepid Quarter
a scale of 1 to 10, they gave a rating of 5 Most Respondents Are Only Mildly Positive
against 4.5 in the previous survey. Similar- About the Jan-March Quarter
ly, they were more confident about other
parameters like financial situation (5.1 in E O sc
Co con ver al
e o On
latest survey versus 4.3 last time), demand nd om all f1 a
conditions (5.2 versus 4.2), hiring condi- itio ic 0
tions (4.7 versus 4.1) and profit margins
(4.9 versus 4.5).
5 ns
.0
The survey highlights that 57 per cent
respondents expect the second wave
of Covid to affect their businesses for a Fina
quarter, and another 22 per cent expect Situ ncial
the pain to last for 6-12 months. Econo- atio
n
mists say despite concerns around the
second wave of Covid-19, and the general 5.1
belief that it could undo some economic
gains of the past few quarters, the impact
is going to be different on each sector
this time.
“Recent mobility restrictions imposed
Demand
in Mumbai, Delhi and Pune in the wake
Conditions
of rising Covid-19 cases may affect some
services sectors, particularly the hospital-
5.2
ity and transportation segments. With, of
course, a caveat that this time it will, hope-
fully, not be a complete lockdown like last
ng
year. Within the services sector, IT and Hiri ns
ITeS, which has large investments and has ditio
Con
created a number of jobs, is likely to do rea-
sonably well, and may hold onto its regular 4.7
profit margins. Manufacturing sector, on
the other hand, is seen to be having PMI
t
ofi s
[Purchasing Managers' Index] higher than
50, though it dipped recently by two points r
P gin
M 4.9
or so. But on the whole, this still shows a ar
better business sentiment,” says Deloitte
India’s Kumar.
Contrary to the upbeat mood in the
January-March quarter, the outlook for
April-June has deteriorated. For example, Will the second wave Will bank NPAs
in four out of five parameters – economic of Covid affect rise after
prospects of the business, overall econom- economic recovery? Supreme Court’s
ic situation, demand conditions and prof- refusal to extend
its – respondents have given lower ratings
No, there Yes, setback loan moratorium
than the previous survey. In hiring con- will be no of a year or period and
ditions, though, the rating has been the impact more
interest waiver?
same as before (4.1 on a scale of 1 to 10). 10 11
As per the survey, 64 per cent respon-
dents expect non-performing assets to
rise after the Supreme Court’s refusal to Yes
extend the loan moratorium period. In 64
order to overcome the pandemic-induced Yes,
Yes, setback setback of Can’t
slowdown, RBI had announced a loan of a quarter 6-12 months Say No
moratorium scheme from March to Au- 57 22 21 15
20 Business Today 2 May 2021Low on Confidence gust last year. Experts say it’s an obvious
response from corporates. “Companies
Most Expect Little Improvement in don’t want to pay but for how long can loan
April-June Quarter moratorium and interest waiver be given?
Banks have the responsibility to pay de-
ll c positors. If the debt is not repaid, it will
e ra omi n ultimately fall on banks,” says economic
Ov con atio
0
f1
expert.
eo E itu
sc n a
al
2
S The survey shows 62 per cent respon-
O
4. dents don’t plan to make fresh invest-
ments in the next six months while 58
per cent expect overall demand to drop
ic substantially over the next three months.
nom
Eco spects This is quite contrary to the ground reali-
Pro ties. How?
4.3
A few corporate leaders Business Today
spoke with said that both urban and rural
demand is looking up. Rural demand is go-
ing to be better on account of good rabi
(winter) crop and additional allocation of
`40,000 crore towards the Mahatma Gan-
Demand dhi National Rural Employment Guar-
Conditions antee Scheme in the stimulus package
4.0 last year. “Urban demand has been good
too. GST (goods and service tax) collec-
tion touched an all-time high of `1.24 lakh
crore in March 2021 on the basis of higher
consumption. Nonetheless, it’s impor-
Hir
Con ing
tant that demand stays robust,” says an
ditio economist.
4.1 ns As a supplement to the survey, we do
an assessment of other economic indica-
tors. These include export-import, index
of industrial production (IIP) and con-
sumer price inflation (CPI). After the re-
P covery in industrial output indicator IIP
4. rofits during September-October 2020, the in-
0 dex slipped back into the negative zone. It
has been negative in two out of last three
months. Retail inflation (CPI) continues
to remain low at 5 per cent in February
What’s your view on the Do you plan to 2021 — below the RBI’s upper limit of 6 per
overall demand scenario make fresh cent. Exports registered a sharp rise of 58
over the next three months? investments in the per cent (year-on-year) and touched the
next six months? highest-ever monthly figure of $34 billion
in March while imports jumped 53 per cent
Will be stable
to $48 billion in the same month.
27 Can’t With the spectre of a second wave
Will drop Say looming large, perceptions have turned
substantially 14 Yes
slightly negative over the past few weeks.
58 24 This might take up a lot of mental space of
Will rise corporate leaders — affecting sentiments
No
3 62 — rather than causing any material harm
to their businesses.
Can’t say
12 (All figures are in %) @manukaushik
2 May 2021 Business Today 21factory to
the world?
22 Business Today 2 May 2021cover story
PLI SCHEME
`199,641 crore
totaL IncentIve
offered for
fIve years
$520 Billion
the Production Linked Projected rIse
Incentive scheme aims to build In domestIc
ProductIon over
an Indian manufacturing base fIve years
across 13 key sectors. What
works. What doesn’t.
By Joe C. Mathew and nidhi Singal
1.9
million
photograph By raJwant rawat
Projected joB
creatIon over
fIve years
2 May 2021 Business Today 23cover story
pli scheme
March 10, the $274 billion, Cupertino, California-based Apple Inc.
announced it is starting production of the 5G-compatible iPhone 12 in
India. It appeared like a routine announcement. After all, Apple has been
assembling older generation iPhones in India through contract manu-
facturers since 2017. It wasn’t.
It might have been a small step for Apple but was a giant leap for Indian
manufacturing. India’s new Production Linked Incentive (PLI) Scheme
to reduce import dependence and promote local manufacturing had
lured three of Apple’s Taiwanese original equipment manufacturers
— Foxconnn Hon Hai, Wistron and Pegatron — to pump in millions of
dollars to expand Indian facilities. They will move a step up from assem-
bling imported parts here to making or sourcing more components lo-
cally. Like Apple, about 70 firms have shown interest in availing the PLI
Scheme to set up manufacturing facilities in three key sectors: mobile
and electronic components; pharma-APIs (active pharmaceutical in-
gredients); KSM (key starting materials) and medical devices.
24 Business Today 2 May 2021WhAT
WoRkS… By December 2020, the applicant mobile and electron-
ics makers had invested `1,300 crore, producing goods
worth `35,000 crore, creating 22,000 additional jobs. The
Around 5% of committed MRP gets Centre was so enthused by the response of companies such
reimbursed, cushions high costs, as Apple to the Large Scale Electronics Manufacturing
makes domestic
production competitive Scheme that it made mobile PLI the template for extend-
ing the scheme to 12 other sectors covering hundreds of
PLI output to cut import dependence diverse products such as air-conditioners, printed circuit
on key raw materials boards, solar photovoltaic cells and LED lights. For compa-
nies willing to expand or set up plants in the 13 sectors, the
PLI incentives, R&D support, scheme offers a massive incentive of `1,99,641 crore ($26.6
increased scale of manufacturing and billion) over the next five years to substitute imports, aug-
other sops such as those in industrial ment domestic production, increase exports and build a
parks to make Indian products
globally competitive manufacturing ecosystem that could provide jobs to about
1.9 million people over the five years. If successful, it could
Strict timelines and committed annual put India on the path to be a $5 trillion economy.
increase in production will help The scheme was launched as part of the Covid-19 eco-
companies make clear business plans nomic stimulus. It covers auto and auto components, tele-
com, pharma, medical devices, IT hardware, food products,
No ambiguity on Centre's outgo as textiles, steel, air conditioners, Advance Cell Chemistry
maximum incentives are defined (ACC) batteries, mobile and electronic components, phar-
based on pre-fixed prices and ma API and medical devices. A CRISIL research report says
production targets
the PLI Scheme — directed at sectors that account for 30-35
per cent of India’s non-oil import bill — can lead to `2-2.7
…AND WhAT
DoeSN’T
PLI for mobile phones/medical devices
became operational very late. So,
companies could miss out on the
first-year benefits
While it is lucrative for sectors like
mobile phones, electronics, telecom
and IT hardware, it may not be so for
others such as specialty steel and
textiles
No penalty for not adhering to
timeline, so companies can avoid
enhancing production if demand
remains subdued
Schemes mostly target big players;
small firms may not find opportunities
Unless government takes
protectionist measures like increasing
import duties,PLI beneficiaries may
face importers slashing prices to
nullify their cost advantage
2 May 2021 Business Today 25lakh crore capital expenditure over two to three years and
generate `35-40 lakh crore revenue during its entire period.
Can the enthusiasm of mobile phone makers be repeat-
ed in other segments? Can a purely demand-driven scheme
(incentive is linked to incremental production and produc-
tion is linked to demand) make a difference when demand
and growth continue to lag in a pandemic-hit world?
But even as companies approach the PLI Scheme with
photograph by VikraM SharMa
excitement and cautious optimism, there are several un-
answered questions. First, will such interest translate
into projects on ground? After all, the base year for mo-
bile phone PLI was 2019/20, implying
the first incentive tranche was due in
2020/21. But no company has so far
approached the government with an
incentive disbursement claim yet, the
Lok Sabha was informed during the
Budget session.
India has over the years offered
Of the estimated production
many incentives to attract manufactur-
ing investment. One was tax holidays
in specific locations. Manufacturing in of `10.5 lakh crore over the
union territories like Puducherry or hill
states like Himachal Pradesh did ben-
next five years, around
efit through such schemes. Then there 60 per cent will be exports”
were manufacturing parks where, along ravi shankar Prasad, Union Minister
with tax benefits, investors could utilise for Electronics and Information
common services and infrastructure. Technology
Special Economic Zones offered incen-
tives exclusively for export-oriented
units. Many tax schemes got rational-
ised with the introduction of the Goods
and Services Tax. Samsung and local brand Lava, are in the process of setting
The big advantage of the PLI Scheme is that it supple- up additional mobile phone capacities by investing `11,000
ments all other sops, is not location-specific, and has noth- crore over the next five years. While foreign players have
ing to do with tax. Here, the government will pay a certain cumulatively proposed production of `9 lakh crore worth of
percentage of the value of additional production compa- mobile phones (unit price of `15,000 or more) utilising en-
nies make, after fulfilling pre-fixed annual, incremental hanced capacities, Indian firms together will be manufac-
investment and production criteria. Under PLI, companies turing another `1.24 lakh crore worth of feature and smart
will earn as direct payments, on average, 5-6 per cent more phones during this period. Hypothetically, at 18 per cent
than what they would otherwise get. While for companies, GST (and assuming that more than half the production is
it is a top-up incentive, for the government, it is assured ad- exported), this could mean at least `36,000 crore tax reve-
ditional investment, production and job creation for every nue for the Central government. That’s a good return for the
rupee it spends as incentive. Most importantly, it is WTO `40,951 crore worth of incentives over the next five years.
compatible. The gains go beyond revenues. The government be-
lieves electronics alone can generate 2,00,000 direct and
The Initial Boost 6,00,000 indirect jobs in the next five years. It is expected
The PLI Scheme for mobiles and electronics parts is built on to increase domestic value addition in mobile phones from
commitment by the industry to invest more, produce more 15-20 per cent to 35-40 per cent. The excitement is palpable.
and claim incentives that on average amount to 5 per cent “Many people have started talking to us. I have invested
of incremental revenue a year during the scheme period. more than `100 crore in plant and machinery. Given an op-
Sixteen foreign and Indian companies, including Apple, portunity, I can even produce Apple devices,” says Rajesh
26 Business Today 2 May 2021cover story
PLI scheme
Agrawal, Director, Bhagwati Private Ltd, which makes mo- cantly. “Of the estimated production of `10.5 lakh crore
bile phones for Micromax and others. The PLI Scheme for over the next five years, around 60 per cent (`6.5 lakh crore)
mobile phones has got international attention too. will be exports,” says Ravi Shankar Prasad, Union Minister
for Electronics and Information Technology.
Why China is Worried
India’s quest to be a factory to the world has rattled China as But Why PLI?
it could lose manufacturing opportunities. Industry play- PLI was conceived to set off the higher cost of manufac-
ers say China, the world’s largest supplier of mobile phones turing in India as compared to China. It seeks to cushion
and parts, is trying to dissuade companies from shifting industry from higher costs due to steeper tax rates, finance
to India. “The Chinese government has reached out to big costs, power tariffs and land prices. A parliamentary panel
contract manufacturers to demotivate them from applying recently said logistics costs alone account for 13 per cent of
for the PLI Scheme,” says an industry source. India’s GDP, higher than developed countries’ figure of less
The government expects companies to export signifi- than 10 per cent. The Covid-19 induced hardships made the
WhaT's Been aChIeved…
Maximum Current Winning Firms
Incentive Status
Mobile and 40,951 Operational Samsung, Rising Star, Foxconn Hon Hai, Wistron, Pegatron, Lava, Bhagwati
electronics (Micromax), Padget Electronics, UTL Neolyncs, Optiemus Electronics, AT&S,
components Ascent Circuits, Visicon, Walsin, Sahasra, Neolync
Pharma - 6,940 Operational Aurobindo Pharma, Karnataka Antibiotics, Centrient Pharmaceuticals India, Ma-
API & KSM cleods, Natural Biogenex, Anasia Lab, Andhra Organics, Solana Life Sciences,
RMC Performance Chemicals, Surya Remedies, Honour Lab, Hindys Lab,
Dasami Lab, Rajasthan Antibiotics, Hetero Drugs, Hazelo Lab, Kinvan, Symbio-
tec Pharmalab, Saraca Laboratories, Meghmani LLP, Aarti Speciality Chemicals
Medical 3,420 Operational Siemens Healthcare, Allengers Medical Systems Limited, Wipro GE Healthcare,
devices Nipro India Corporation, Sahajanand Medical Technologies
Maximum incentive in `crore
…and The fuTure PLan
Sector Maximum Current status
Incentive
Auto and auto components 57,042 Awaiting Cabinet nod
ACC battery 18,100 Awaiting Cabinet nod
Pharma – drugs 15,000 Cleared by Cabinet
Telecom and Networking 12,195 Cleared by Cabinet
Food products 10,900 Cleared by Cabinet
Textiles 10,683 Awaiting Cabinet nod
Electronics and IT hardware 7,350 Cleared by Cabinet
Specialty steel 6,322 Awaiting Cabinet nod
White goods 6,238 Cleared by Cabinet
Solar PV modules 4,500 Cleared by Cabinet
Maximum incentive in `crore
2 May 2021 Business Today 27cover story
pli scheme
scheme even more useful for industry. cent non-oil merchandise trade deficit. The scheme cov-
While the PLI Scheme does not specifically incentiv- ers almost all top 10 import items except petroleum prod-
ise exports, it also has the potential to help manufacturing ucts, gems and jewellery and fertilisers. It has the potential
gain scale and become competitive, apart from promoting to increase India’s share in the global supply chain, reduce
exports and narrowing the trade deficit. It is in line with import dependence (especially on China) and create man-
a demand made by the Confederation of Indian Industry ufacturing champions — all in the next five-seven years.
four years ago. The high expectations were spelled out by Prime Minister
The scheme can also help India reduce dependence on Narendra Modi when he said the “scheme would result in
imports for key raw materials. According to India Exim increasing production by about $520 billion in the next five
Bank Research, nearly 79 per cent imports in 2019 were of years.” But what is PLI all about?
intermediate goods. “Clearly, India’s manufacturing sec-
tor has significant dependence on imported intermediates, The Scheme
which can be reduced by greater localisation of manufac- AtmaNirbhar Bharat 3.0, or the third set of Covid-19 eco-
turing activities through the PLI Scheme,” says Prahala- nomic stimulus announced by Finance Minister Nir-
than Iyer, Chief General Manager, Export-Import Bank of mala Sitharaman on November 12, 2020, spelt out the PLI
India. The Exim Bank analysis reveals that India’s trade Scheme in its current scope and size. The government
deficit on account of just five sectors in the PLI list — ACC added 10 sectors with a commitment to set aside `1.46 lakh
battery, electronics, medical devices, solar PV and white crore over five years. This was in addition to the three sec-
goods — was $40.9 billion in 2019/20, accounting for more tors – electronics (`40,951 crore), pharmaceuticals (`6,940
than a quarter of merchandise trade deficit and 56.8 per crore) and medical devices (`3,420) crore – totalling `51,311
POTENTIAL PLI CANDIDATES
28 Industries Across 9 sectors
Sector Industry Why This Sector
Aerospace & Defence Aircraft components & sub-systems 60% requirement met by imports
Auto-Electricals & Electronics, Automotive Bat-
Auto & auto
teries, Heavy Commercial Vehicles, Construction Contributes 45% to GDP
components
Machinery, Passenger Cars, 2/3 wheelers
Infrastructure push, easing FDI norms to
Cement Cement
result in demand surge
Agro Intermediates, Agro Chemicals, Basic Poly-
Chemicals mers and Elastomers, Construction Chemicals, Accounts for 5.4% of Indian exports
Other Performance Chemicals
Pumps and Valves, Machine Tools, Pressure Ves-
Engineering Contributes 12% to manufacturing GDP
sels, Solar PV
Conventional Lighting and LED Lighting,
Rising import dependence, huge local de-
ESDM Mobile Phones, Printed Circuit Boards
mand, contributes 12% to manufacturing GDP
and Sub-Assemblies
Bulk Drugs, Generic Pharmaceuticals, 20% global exports in generics, 10% share in
Pharma
Pharma APIs global pharma by volume
Severe competition from China, other FTA
Steel Flats, Forgings and Castings, Longs
countries
Already employs 49 million, potential for
Textile Apparel, Made-ups
another 50 million jobs by 2025
Source: CII-Champion Manufacturing Industries 2025
28 Business Today 2 May 2021crore that were already under the scheme (the Cabinet had schemes that followed, was borne out of a desire to op-
approved PLI for Large Scale Electronics Manufacturing on erationalise the National Policy on Electronics 2019 that
March 21, 2020, four days before the first lockdown. Phar- talked about positioning India as the world’s Electronics
maceuticals and medical devices were added on July 21). Factory. About 50 industry leaders representing leading
At present, approvals for eligible companies have been global and Indian electronic companies such as Apple,
given for these three sectors, though the list is not complete Samsung, Lava, Xiaomi, Bosch, Foxconn, Panasonic and
in case of pharmaceutical and medical device segments. Of Wistron met Ravi Shankar Prasad at Vigyan Bhawan,
the remaining 10 sectors, Cabinet approvals for six — phar- New Delhi, on September 16, 2019. Prasad’s ministry
maceutical products like complex generics, biopharmaceu- came out with a scheme for financial incentive to boost
ticals, etc (`15,000 crore incentive), IT hardware prod- domestic manufacturing and attract investments in the
ucts like laptops, tablets, personal computers and servers electronics value chain, including electronic components
(`5,000 crore), telecom and networking products (`12,195 and semiconductor packaging. It extended an incentive
crore), food processing (`10,900 crore), white goods like of 4-6 per cent on incremental revenue (over 2019/20) of
air-conditioners and LEDs (`6,238 crore) and solar PV goods manufactured in India and covered under target
modules (`4,500 crore) — are also in place. segments for a period of five years from the base year. The
Cabinet approvals, followed by notification with op- eligibility conditions included minimum incremental in-
erational guidelines, can happen any day for automobiles vestments and revenue. While incremental revenue tar-
& auto components (`57,042 crore), ACC battery (`18,100 get for domestic mobile phone companies begins at `500
crore), textile products (`10,683 crore) and specialty steel crore in year one to `5,000 crore in year five; for foreign
(`6,322 crore). Since it is time-bound, companies will get a players, it is `4,000 crore in year one to `25,000 crore in
fixed time to apply. Government approval will come within year five. Domestic firms have to commit an incremen-
the stipulated period to help eligible firms meet thresholds tal investment of `200 crore over four years. For foreign
for availing the incentive. The incentive will be paid to the players, this is `1,000 crore. Apart from mobile phones,
benefeciary through direct transfer to bank accounts. there were about a dozen segments such as SMT (surface
mount technology) components, discrete semiconduc-
Electronics Industry: On Track tor devices, Printed Circuit Boards, etc. While AT&S, As-
The PLI Scheme for electronics, the template for all other cent Circuits, Visicon, Walsin, Sahasra and Neolync were
CUTTING THE IMPORT BILL:
these sectors Account for 30-35%
of India's Non-oil Import Bill
Sectors Target segment under PLI Import Bill FY 20 Import as % of Dependent
(`crore) Consumption Geographies
Automobiles and Semi-finished
80,000-90,000 20-25% China, Korea
components and Final products
Telecom and
Final product 50,000-60,000 65-75% China, Korea
networking products
White goods
Final product 35,000-45,000 20-30% China
(AC and LED lights)
Pharmaceuticals
Raw material 20,000-25,000 30-40% China
(API and KSM)
Speciality Steel Final product 20,000-25,000 30-35% China, Korea, Japan
Solar photovoltaic
Final product 11,000-12,000 80-85% China, Singapore, Vietnam
modules
Raw materials for auto, white goods, IT hardware and medical devices are metals and plastic. For pharma, it is KSM, semi-finished is API and
final product is drug/formulation. In white goods, imports of only RAC and LED lights considered. In IT hardware, imports of only laptops,
PCs, tablets and servers considered. Source: CRISIL
2 May 2021 Business Today 29cover story
pli scheme
selected for incentives under the Specified Electronic
Components Segment, Samsung, Rising Star, Foxconn
photograph by bandeep singh
Hon Hai, Wistron, Pegatron, Lava, Bhagwati (Micro-
max), Padget Electronics, UTL Neolyncs and Optiemus
Electronics got approval for making mobile phones. “The
game has started now. The government of India has un-
derstood what to do," says Bhagwati's Agrawal.
Pharma: In Sweet Spot
The response to the pharmaceutical schemes — there are
two packages, one is already in force, while the other is in
the notification stage — has been encouraging. The first
scheme — PLI for Critical Key Starting Materials/Drug
What is needed is enabling our
industry to become globally
competitive. Our cost is very
high, be it logistics, power
or raw material. One way to
overcome that is scale”
R.C. Bhargava, Chairman, Maruti Suzuki
Intermediaries and Active Pharmaceutical Ingredient derabad-based Aurobindo Pharma has bagged most ap-
— targets 41 highly or almost entirely import dependent provals in Segment I, which provides incentives to set up
products from four target segments. The second one is greenfield facilities for fermentation-based key starting
meant to promote innovation for development of complex materials and drug intermediates for production of med-
and high-tech products, including those used in emerging icines like penicillin G and Erythromycin Thiocynate.
therapies, apart from in-vitro diagnostic devices and im- Eleven companies, including Macleods Pharmaceutical
portant drugs not manufactured in India. for Rifampicin and Natural Biogenex for commonly pre-
“We are very happy with the government decision, it is scribed Betamethasone and Dexamethasone, will make
timely. We have 68 per cent import dependence on China essential raw materials for key medicines. The incentive
for these products. The PLI-I Scheme will bring down this for this six-year PLI varies from 10 per cent to 20 per cent
dependency by 25 per cent and PLI-II by another 25 per depending on the manufacturing process. “We looked at
cent. Only nominal dependence on China will remain,” our captive consumption, and the products that were on
says B.R. Sikri, Chairman, Federation of Pharma Entre- the PLI list. We realised that if we select some of those
preneurs. products, we have some assured business. Today majori-
The number of applicants shows the scheme is ty of these products are imported, that too from China.,”
making business sense. Of the 215 applications for 36 says Madan Mohan Reddy, Director, Aurobindo Pharma.
products in four segments, 47, with total committed The company is in the midst of finalising the land for the
investment of `5,366.35 crore, have been approved. Hy- new plant.
30 Business Today 2 May 2021THE INCENTIVES FOR These plants will entail a total investment of `729.63 crore
MOBILE PHONE MAkERS and employ about 2,300 people. Commercial production is
projected to commence from April 1, 2022. Disbursal of PLI
Proposed Incremental Incremental over the five-year period will be up to `121 crore per appli-
incentive investment (`) sales
cant per target segment.
First Year - 6% 250 crore `4,000 crore “The industry’s views were accepted by the govern-
Second Year 6% 500 crore `8,000 crore ment, especially on reducing the threshold investment
Third Year 5% 750 crore `15,000 crore
limit and criteria,” say Bhargav Kotadia, Managing Di-
rector, SMTPL. His company has committed investment
Fourth Year 5% 1,000 crore `20,000 crore of `166.89 crore to manufacture products like heart
Fifth Year 4% ` 25,000 crore valves, stents, PTCA balloon dilatation catheters and
Total - `1,000 crore over four years; *devices priced at minimum heart occluders. This is one of the largest in the current
of `15,000; incremental values are over base year. Source: Meity set of approvals.
The company has made considerable progress in con-
structing a facility in the medical devices park in Telangana.
THE PROCESS TO
“This is envisaged as Asia’s largest stent manufacturing and
R&D facility. It will manufacture over 1.2 million stents and
GET PLI BENEFITS two million catheters a year at full capacity. We will also
house and develop advanced medical products in interven-
• Any company registered in tional cardiovascular, endovascular and other niche devices
India can apply in the CVD (cardiovascular diseases) domain,” he says.
Wipro GE Healthcare Private Ltd plans to invest about
• Eligible applications to be approved by `100 crore over the next three-four years for manufactur-
Empowered Committee comprising ing medical devices. “As dependency shifts to our local
CEO NITI Aayog, DGFT, Secretaries
of Economic Affairs/Expenditure/ manufacturing hub over the next few years, the need for im-
Revenue/Meity/DPIIT porting these products will naturally decrease. It certainly
(PLI participation) is a combination of import substitution
• Selected companies to fulfil production and higher growth rate propelled by lower cost leading to
and investment thresholds to make additional revenues,” says Shravan Subramanyam, Presi-
disbursement claims dent & CEO, GE Healthcare, India & South Asia.
• Empowered Committee will scrutinise Next In Line
and approve claims
The next set of Cabinet approvals came for three schemes
in February 2021. These are more or less connected to the
• Incentives paid to eligible applicants by
direct transfer to bank accounts three operational ones. While the two schemes targeting
IT hardware and telecom and networking products can be
seen as an attempt to complete what started with mobile
phones and other electronics products last year, the phar-
maceutical scheme aims to cover a much bigger universe
Medical Devices: Adding Muscle of medicines to make India self-reliant in essential ingredi-
The third PLI Scheme where companies have been chosen ents used in life-saving drugs.
(not all applications have been examined and some more “Consumption of IT hardware is perhaps the largest af-
approvals will happen soon) and investments are already ter mobile phones. PLI for this segment can do what it did
happening is for medical devices. The incentive size is small to mobile phones,” says Satya Gupta, Chairperson, India
compared to others, but the impact could be huge as self- Electronics and Semiconductor Association and founder
reliance in selected products — CT Scan, MRI, Ultrasonog- and CEO, Seedeyas Innovations. The major thrust of the
raphy, X-Ray, Cath Lab, Positron Emission Tomography scheme is on laptops and tablets whose demand is largely
Systems, Heart Valves, Stents, PTCA Balloon Dilatation met through imports (valued at $4.21 billion and $0.41 bil-
Catheter and heart occluders — is critical for India. lion, respectively, in FY20). The scheme offers an incentive
Siemens Healthcare, Allengers Medical Systems, Wipro of 4 per cent to 2 per cent to 1 per cent on net incremental
GE Healthcare, Nipro India Corporation and Sahajanand revenue (over base year 2019/20) to eligible companies for a
Medical Technologies (SMTPL) have received approval. period of four years. The incentive outlay is `7,350 crore. It
2 May 2021 Business Today 31cover story
PLI SCHEME
is expected to benefit five global and 10 domestic players and
generate over 1,80,000 jobs in four years. The domestic value
addition in IT hardware is expected to rise to 20-25 per cent by
2025. “Today, only 15-20 per cent of domestic consumption
is made in India. Servers are 100 per cent imported, laptops
are 90-95 per cent imported, and only 30 per cent desktops
are made here. Four companies — HP, Lenovo, Dell and Acer
— manufacture in India currently,” says George Paul, CEO,
Manufacturers Association of Information Technology. Ac-
photograph by rajwant rawat
cording to him, PLI cannot herald changes overnight. “When
China started out, it developed an integrated strategy that
stitched together a series of steps needed towards maximis-
ing value addition in China. India is doing the same thing. It
is not a one-year strategy. We shouldn’t
lose sight of our goal,” he adds.
Acer, the Taiwanese hardware and
electronics major, feels the PLI Scheme
will generate jobs, lead to better pricing
and develop adjacent ecosystems. The
company, which makes tablets and lap-
tops in India, says it can boost manu-
facturing in the IT hardware segment. After Covid-19, when demand
“We do intend to apply for PLI via our
ecosystem vendors,” says Sudhir Goel,
is perhaps at an all-time low,
Chief Business Officer, Acer India. who will these manufacturers
In telecom equipment, the focus produce for and why would
products are transmission equipment,
4G/5G Next Generation Radio Access they empty their pockets with
Network and Wireless Equipment, Ac- investments immediately?”
cess & Customer Premises Equipment,
Gourav Vallabh, Congress Spokesperson
Internet of Things devices, Access De-
vices and other wireless and enterprise
equipment like switches and routers.
The aim is to reduce the huge import
of telecom equipment worth more
than `50,000 crore. The incentive to approved companies is pharmaceutical ingredients, key starting materials and
`12,195 crore over five years. drug intermediates that were not there in last year’s phar-
Ericsson, the first telecom vendor to start making tele- ma PLI. The third covers repurposed drugs, auto immune
com equipment in India, way back in 1994, expects PLI to drugs, and anti-cancer, anti-diabetic, anti-infective, car-
provide a fillip to component manufacturing. Nitin Bansal, diovascular, psychotropic and anti-retroviral drugs. The
MD, Ericsson India, says the company is waiting for the fi- scheme period is from 2020/21 to 2028/29.
nal guidelines to take a call on participation. “The process of On March 31, the government notified the fourth
claiming incentives and timelines for pay-out of incentives scheme, PLI for the food processing industry, for implemen-
are important considerations,” he says. tation during 2021/22 to 2026/27, with an outlay of `10,900
Meanwhile, the second PLI Scheme for pharmaceuticals crore. The scheme will encourage investment in four food
has come as part of an umbrella programme to make the In- segments — Ready to Cook/Ready to Eat, processed fruits
dian pharmaceutical industry self-reliant. The incentives are and vegetables, marine products and mozzarella cheese.
structured under three categories. The first covers biophar- The government says the aim is to support creation of global
maceuticals, complex generic drugs, patented drugs or drugs food manufacturing champions, support Indian value-add-
nearing patent expiry, cell-based or gene therapy drugs, ed food brands in international markets, increase off-farm
orphan drugs, special empty capsules, complex excipients, jobs and ensure remunerative prices to farmers. Amul, ITC,
phyto-pharmaceuticals, etc. The second covers some active Nestle, Britannia and Keventer Agro are among the major
32 Business Today 2 May 20212019-20 (sectors in which PLI has
top 10 been announced for some products)
153.65 / 32.37%
imported
2019-20
2020-21 (April-Dec)
items in $ billion / % share
10.73 / 2.26%
Source: Commerce
5.56 / 2.13%
Ministry
9.25 / 1.95%
6.01 / 2.3%
54.49 / 11.48%
65.70 / 25.13%
6.06 / 2.32%
43.37 / 9.14%
6.71 / 1.41%
9.87 / 2.08%
49.19 / 10.36%
8.13 / 3.11%
14.21 / 2.99%
25.33 / 9.69%
8.68 / 3.32%
19.82 / 4.17%
29.94 / 11.45%
13.71 / 5.25%
32.55 / 12.45%
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players to have shown interest in the scheme. 75 per cent in the next three years, says Sharma.
The most recent ones to get Cabinet nod are PLI on The government wants to encourage local solar PV
white goods, primarily air-conditioners, and high efficien- panel manufacturing to reduce the possibility of hacking
cy solar PV modules to create additional 10,000 MW solar of the value chain. Among the estimated benefits are direct
PV manufacturing capacity. Both were notified on April investment of `17,200 crore in setting up solar PV manu-
7, 2021 “The first objective is to manufacture, not just as- facturing projects, direct employment to about 30,000 and
semble, in India. At present, many components come from indirect employment to about 1,20,000 people and import
elsewhere. Last year, the Indian AC market was around 7.5 substitution of `17,500 crore worth of products every year.
million units. Of this, 2.5 million were imported, which has
come down significantly due to ban on import of ACs with Awaiting Approval
refrigerants. Further, value addition is very low, just about The companies eyeing opportunities arising out of the last
25 per cent,” says Manish Sharma, President & CEO, Pana- four categories — automobiles, ACC batteries, textiles and
sonic India, and Chairperson, Ficci Electronics & White speciality steel — are waiting for details of the scheme. In
Goods Manufacturing Committee. Sharma expects the these cases, Cabinet approval should come first. Opera-
market to touch nine million this year of which 8-8.5 mil- tional guidelines will follow.
lion will be manufactured locally. At present, there is 25 per The biggest scheme is for the automotive industry.
cent local value addition. The PLI Scheme can take this to There is a `57,042 crore incentive for automobile and auto
2 May 2021 Business Today 33You can also read
