India’s PLI Scheme: Promising Growth but Uneven Job Creation Across Sectors

India’s Production-Linked Incentive (PLI) scheme, a flagship initiative aimed at boosting domestic manufacturing and creating jobs, has had varied success across its 14 sectors. While some sectors have performed exceptionally well, others are struggling to meet their targets, highlighting the challenges and opportunities within this ambitious program. Insights drawn from data obtained under the Right to Information (RTI) Act shed light on the progress of these schemes up to June 2024.

PLI Schemes: A Snapshot of Progress

The PLI scheme, launched in 2020 with the goal of attracting investments and enhancing manufacturing capacities, has set ambitious targets for job creation. According to data compiled through RTI applications by The Indian Express, a total of 5.84 lakh direct jobs were created across sectors as of June 2024. This figure represents about 36% of the 16.2 lakh jobs projected to be generated over the scheme’s five-year implementation period.

Key Performers in PLI: Food Processing, Pharmaceuticals, and Mobile Phones

Three sectors stand out for their job creation success: food processing, pharmaceuticals, and mobile phone manufacturing. Combined, these sectors accounted for over 75% (approximately 4.47 lakh) of the total jobs created. The food processing sector, for example, had a target of creating 2.5 lakh jobs over six years (2021-22 to 2026-27) and had already generated 2.45 lakh jobs by June 2024. Similarly, the pharmaceutical sector is on track to meet its goals, bolstered by strong demand and strategic investments.

The mobile phone manufacturing sector has been particularly noteworthy, contributing 1.22 lakh jobs in just over three years. This success has been driven by major manufacturers like Apple, which has established a significant contract assembly base in India through its partner Foxconn as part of efforts to diversify production away from China.

Slow Progress in Textiles and ACC Battery Storage

However, not all sectors have shared the same level of success. The textiles sector, launched in September 2021, had initially set a job creation target of 7.5 lakh, which was later revised to 2.5 lakh. As of June 2024, only 12,607 jobs had been created, far short of expectations. The sector has a long way to go, with the scheme running until 2028-29 and a gestation period of two years (2022-23 and 2023-24) allowing companies to set up operations. Nonetheless, some stakeholders have pointed out that certain eligibility criteria may pose challenges, especially for smaller firms.

The Advanced Chemistry Cell (ACC) battery storage sector, launched in May 2021, is another area where progress has been slow. With a goal to establish large-scale manufacturing facilities, only 802 jobs have been generated so far, as production has not yet commenced. While companies such as Ola and Reliance Industries were selected as part of the scheme, production is expected to begin between October 2024 and April 2026, with incentives paid only after manufacturing starts.

Mixed Results in Other Sectors

Several other sectors are showing varied levels of progress:

• Automobile Manufacturing: The sector has generated 32,081 jobs up to June 2024, aiming for a target of 1.45 lakh jobs over five years. An extension until 2027-28 was granted in 2023, providing more time to reach the goal.
• IT Hardware: This sector has seen slower job creation, with only 4,423 jobs reported as of June 2024. The PLI scheme for IT hardware has an ambitious target of 75,000 jobs over six years, supported by a boosted outlay of Rs 17,000 crore.
• Specialty Steel: With 6,108 jobs created in 15 months, this sector has made some headway, though it still faces challenges to meet its five-year target of 68,000 jobs.
• Medical Devices: The sector has created 5,596 jobs over the past two years and three months. With a five-year target of 33,750 jobs, it will need to create around 9,000 jobs per year for the next three years to stay on track.

Challenges in Scaling Up

One of the primary hurdles for sectors like textiles and ACC battery storage is the initial setup phase. The PLI scheme includes a gestation period of 1-3 years for most sectors, allowing companies time to establish production lines. However, the complexity of meeting specific eligibility requirements has raised concerns, particularly for smaller enterprises.

According to a spokesperson from the Ministry of Textiles, approximately 17,000 jobs have been created so far with an investment of Rs 6,000 crore and a turnover of Rs 2,000 crore. This reflects the sector’s ongoing efforts to ramp up operations and meet its long-term targets.

Positive Developments and the Path Forward

While certain PLI schemes have encountered obstacles, others continue to make substantial strides. For instance, sectors like food processing, mobile phone manufacturing, and pharmaceuticals are on track to meet or exceed their targets. The government remains committed to refining the scheme and supporting sectors that need additional momentum.

The PLI scheme has demonstrated its potential to transform India’s manufacturing landscape by attracting significant investments and boosting job creation. However, the varying progress across sectors highlights the need for targeted support, flexible policies, and incentives that address the unique challenges faced by different industries.