PM Modi’s massive manufacturing push. Five Indian companies riding the tailwind

The Centre has rolled out PLI schemes for various sectors to boost India's manufacturing capabilities. (File Photo: Mint)
The Centre has rolled out PLI schemes for various sectors to boost India's manufacturing capabilities. (File Photo: Mint)


  • These companies are set to make the most of the government’s production linked incentive (PLI) scheme.

In March 2020, the Modi government approved a new incentive program called the Production Linked Incentive Scheme (PLI) for large-scale electronics manufacturing.

This was to target makers of mobile phones and certain electronic components by offering financial incentives to start or build up their existing domestic manufacturing capacity.

The government had approved 32 beneficiaries under the scheme of which 10 (five foreign and five domestic companies) were approved for mobile manufacturing.

Over the last two years, this scheme has now been extended to fourteen sectors, including automobile, steel, and pharmaceuticals.

Through this scheme, the government aims to boost manufacturing in the country, generate employment, and encourage technological innovations.

In the Union Budget for 2021-22, the government assigned it an outlay of 2 tn. It expects to create 60 m jobs and generate 30 tn in production over the next five years.

Here are five companies riding the tailwind.

#1 Dixon Technologies

First on the list is Dixon Technologies.

The company is engaged in manufacturing products in the consumer durables, lighting, and mobile phones/smartphones market in India.

It plans to invest 2 bn under the PLI scheme for the telecom sector.

The government had approved 32 beneficiaries under the PLI scheme for Large-Scale Electronics Manufacturing, of which 10 (five global and five domestic companies) were approved for mobile manufacturing.

Dixon, being a domestic manufacturing firm, had to invest 500 m to be eligible for the smartphone PLI scheme, and manufacture phones worth 5 bn in the first year.

The company is now eligible to receive around 530 m for the first quarter of operations between October to December 2021, as incentive on incremental sales.

It is the first company to get an approval for disbursement of incentives under the PLI scheme. The incentive was approved for Padget Electronics, a wholly owned subsidiary of Dixon Technologies. The firm’s manufacturing facilities are in Uttar Pradesh's Noida.

For the financial year 2022, Dixon's revenue rose 66% YoY to 107 bn. However, operating profit rose only 32% YoY as raw material expenses went up.

#2 Tata Power Solar

Second, on our list is Tata Power Solar.

The company is wholly owned subsidiary of Tata Power. Tata Power Solar manufactures solar modules, solar cells, and other solar products, and provides EPC services for solar power projects.

It stands to benefit from the solar PLI scheme. On 21 September 2022, the government approved the second tranche of the production-linked incentive (PLI) scheme for solar modules.

As per the approved scheme, benefits worth 195 bn will be given by the government to solar PV manufacturers for five years after commissioning the PV manufacturing plants.

In the five years, it's expected that about 65,000 MW per annum manufacturing capacity of fully and partially integrated solar PV modules would be installed. Imports worth 1.4 tn will also be substituted by domestic production of solar panels.

This is expected to boost the entire solar sector. It will be a win-win for all, the PV manufacturers, the solar power generation and distribution companies, and the government.

Tata Power Solar Systems has commissioned 1.5 GW of utility-scale projects and has an order book of around 3 GW amounting to 120 bn as on 31 March 2022.

The company has recently received a letter of award (LoA) of 6 bn from NHDC for setting up a 125 MW floating solar project.

#3 Adani Infrastructure

Third on our list is Adani Infrastructure.

The company is a subsidiary of Adani Enterprises. It operates and maintains key assets in India’s power sector.

It has built the largest solar photovoltaic plant in the country with a capacity of 40 MW in Bitta, Gujarat. The project consists of amorphous silicon thin-film modules and is spread over 350 acres of land.

Adani Infrastructure is also a beneficiary of the solar PLI scheme. The government recently issued a letter of award to Adani Infrastructure along with other companies for the first tranche of the 45 bn PLI scheme on High-Efficiency Solar PV Modules.

Adani Infrastructure quoted a bid of 3.6 bn for undertaking the integrated manufacturing of polysilicon to modules of 4,000 MW capacity.

There are four stages in module making: polysilicon, wafers, cells, and modules. At present, India's existing 15 GW production capacity has no polysilicon or wafer production capacity.

The incentives are expected to add 10 GW of high efficiency integrated solar PV manufacturing plants and bring direct investment of around 172 bn in solar PV manufacturing.

#4 Reliance New Energy

Fourth on the list is Reliance New Energy. The company is a wholly owned subsidiary of Reliance Industries.

Reliance New Energy has bid for the production-linked incentive (PLI) scheme for advanced chemistry cell (ACC) battery storage.

Advanced chemistry cells are the new generation cells that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.

Reliance New Energy has signed an agreement with Ola Electric and Rajesh Exports for the same. As per the agreement, the companies will receive production-linked incentives under the 181 bn program.

The company will have to set up a manufacturing facility within a period of two years. The incentive will be disbursed thereafter over a period of five years on sale of batteries manufactured in India.

This will be favourable to the EV ecosystem and energy storage market as it will support the demand for EVs and renewable and attract investment in this sector.

Reliance Industries plans to create or enable capacity to generate at least 100 gigawatts of electricity from renewable sources by 2030.

It is developing the Dhirubhai Ambani Green Energy Giga Complex, one of the largest integrated renewable energy manufacturing facilities in the world.

This complex will have four giga factories, which cover the entire spectrum of renewable energy.

#5 Larsen & Toubro (L&T)

Last on our list is L&T.

The company is a multinational conglomerate primarily engaged in providing engineering, procurement and construction (EPC) solutions in key sectors such as infrastructure, hydrocarbon, and power.

L&T has also bid for the PLI Scheme for Advanced Chemistry Cell (ACC) battery storage. The engineering major plans to invest up to 200 bn in building its green energy portfolio.

It has been evaluating prospects in green energy areas including green hydrogen, battery storage and offshore wind, among others, as it seeks to reduce its presence across the fossil fuel space and build new businesses around green energy.

The PLI scheme is a step in that direction.

Besides this, it has already commissioned its first hydrogen generation plant at the Hazira manufacturing facility in Gujarat.

The plant will produce 45 kg of green hydrogen daily through an alkaline electrolysis process and use it for captive consumption in the company's local manufacturing complex.

It also plans to focus on the emerging business opportunities in offshore wind farms, which will address renewable energy requirements.

What next?

After pushing for local manufacturing, the government is now gearing up for another major transformational push that is imperative for the country’s Atmanirbhar goals.

Last week, the government unveiled the National Logistics Policy (NLP).

Through the NLP, the government aims to bring down the cost of logistics to single digit levels from 13-14% of the gross domestics (DGP) product of the country. This is expected to accelerate growth and increase the country’s participation in global trade.

It has set three key targets - to reduce cost of logistics in India, improve the logistics performance index ranking, and third, to create data driven decision support mechanism for an efficient logistics ecosystem.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

​​Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

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