Indian Prime Minister Narendra Modi’s government has decided to let lapse a US$23 billion programme to incentivise domestic manufacturing, just four years after it launched the effort to woo firms away from China, according to four government officials.
Advertisement
The scheme will not be expanded beyond the 14 pilot sectors and production deadlines will not be extended despite requests from some participating firms, two of the officials said. Some 750 companies, including Apple supplier Foxconn and Indian conglomerate Reliance Industries, signed up to the Production-Linked Initiative (PLI) scheme, public records show.
Firms were promised cash payouts if they met individual production targets and deadlines. The hope was to raise the share of manufacturing in the economy to 25 per cent by 2025.
Instead, many firms that took part in the programme failed to kick-start production, while others that met manufacturing targets found India slow to pay out subsidies, according to government documents and correspondence seen by Reuters.
As of October 2024, participating firms had produced US$151.93 billion worth of goods under the programme, or 37 per cent of the target that New Delhi had set, according to an undated analysis of the programme compiled by the commerce ministry. India had issued just US$1.73 billion in incentives – or under 8 per cent of the allocated funds, the document said.
Advertisement
News of the government’s decision to not extend the plan and specifics about the lag in payouts are being reported by Reuters for the first time.