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All global firms like Apple, its suppliers Wistron, Foxconn relocating to India — NITI Aayog CEO

At a FICCI convention, NITI Aayog CEO Amitabh Kant said Rs 2 lakh crore Production-Linked Incentive scheme will make India highly competitive in the global economy.

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New Delhi: The Rs 2 lakh crore Production-Linked Incentive (PLI) scheme cleared by the Union cabinet last month will give a big boost to the manufacturing and export sectors, making India highly competitive in the global economy, NITI Aayog CEO Amitabh Kant said Saturday.

Addressing the 93rd FICCI annual convention, Kant said the scheme, which started off with the mobile and electronics manufacturing sector, has now been expanded to another 10 sectors, including electronics technology products, automobile, pharmaceutical, telecom and textile, among others.

The scheme, with an outlay of Rs 2 lakh crore, will support global manufacturers, who relocate to India as well as domestic manufacturers for a period of five years. 

Kant said this is the first time the government has moved away from supporting capital expenditure at the investment stage to saying that “you (companies) increase production and we (government) will support you”.

“In the five years, the company should be able to become so big, so large that they should be able to provide all the backward forward linkages and be able to become a very integral part of the global supply chain,” he added. 

The objective, Kant said, was to provide major impetus to manufacturing and exports. “This to my mind is one of the biggest schemes, which the government has come out to provide support to the private sector in manufacturing.” 

Terming the scheme in the mobile phone sector a resounding success, Kant said all top global manufacturers of the likes of Apple and its suppliers Wistron, Pegatron, Foxconn are relocating and coming to India. “Samsung has also invested in India, and is now expanding in a very big way,” he said.

The NITI Aayog CEO, however, added that if manufacturers are not able to increase production, then the government outgo will not take place. “Only, if you are able to meet the challenge and grow, the government will provide the 26 billion dollars.”

Kant said the schemes are at a very advanced stage. The ones for electronic and for manufacturing and mobile, active pharmaceutical ingredients have already been announced and others are at a very advanced stage. They are going through the advanced process of approval. The umbrella scheme was approved by the cabinet,” he added.

Also read: Modi govt announces Rs 1.46 lakh crore scheme for 10 sectors, auto sector gets biggest share

India must get into the ‘sunrise’ area of growth

Not just global manufacturers, the scheme also supports Indian manufacturers. 

“This is the time when supply chains across the world will get relocated and this is an opportunity for India to really take the opportunity to see that many manufacturers who went to different destinations relocate their manufacturing to India,” Kant said. 

The idea, Kant added, is that major global companies as well as Indian companies should apply under the scheme. “These ten sectors will play a major role in making Indian manufacturers globally competitive and will attract investment,” he added.

The NITI Aayog CEO further said that what India does quite often is to focus on the sunset area of industries. 

“It is then very difficult to penetrate emerging areas of growth. Just to give you the example that 73-74 per cent of our export is in areas where the world market is just 30 per cent. The sunrise area of growth (is) where India must get in and ride the wave of growth,” he added.

Two major challenges 

Kant, however, admitted to two main challenges in implementing the scheme. 

The first, he said, is to bring down the cost of logistics and the second, is the high cost of electricity for the manufacturing sector and industrial consumers as compared to other countries.  

The government, Kant said, is working to address both the issues. 

“The government has already announced a scheme to privatise discoms (power distribution companies) for Union territories. The Odisha government has already moved forward (in this regard),” he added.

Also read: Modi govt’s Rs 7,000-cr scheme to reduce API dependence on China could roll out this month


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