BackPLI not a permanent policy feature: Rajeev Chandrasekhar
The minister, at the Mint-Zetwerk Smart Manufacturing Summit 2023, said the PLI should not be thought of as a permanent solution.
PremiumNEW DELHI : The production linked incentive (PLI) scheme should not be thought of as a permanent solution but as a transition period for India as the country moves towards becoming a globally competitive economy achieving $300 billion in electronics manufacturing, said Rajeev Chandrasekhar, minister of state for IT and electronics at the Mint-Zetwerk Smart Manufacturing Summit 2023.
“PLI, I don’t think should be thought of as a permanent let us say part of the equation of being a manufacturing economy. It is a way to bootstrap the economy or bootstrap the players. But it will more than be compensated by all of the other efficiencies that these volumes and these gains will create over time," he said.
He noted that PLI was addressing the disadvantage between India and its cost structure in the value chain versus Vietnam or China. But there were more factors such as ease of doing business, rationalization of levies, import and export tariffs and creation of logistics ecosystem that will be responsible for taking India closer to its goal by 2026.
“Think of PLI as the period during which we are transitioning from a less than fully competitive economy to a fully competitive manufacturing (economy). So the PLI will take care of that interim period. But the economy, the efficiency, the competitiveness, the skills, the logistics, costs, all of that will eventually kick in and make us competitive," he said.
Chandrasekhar added that India should target $500-700 billion electronics manufacturing over 10 years, adding that the scale was achievable on the back of India’s youth power which differentiates it from China and Vietnam. He said $300 billion, which was 6% of the $1.5 trillion global opportunity in electronics manufacturing, was still a tiny portion and India could aim for far more.
“If you look at a 10 year horizon, we should be thinking of $500-700 billion of electronics manufacturing coming out of India. It is very doable. It is something that is in front of us as an opportunity and it is for this generation of entrepreneurs to either seize opportunity or to let it go," he said.
He further added that the country will achieve the scale of manufacturing, where exports will be a significant portion, by broadening and deepening the electronics ecosystem which in turn will create volumes.
He said states were working with the Centre to provide incentives to companies wanting to invest in India, so much so that there was competition among states to win over companies for the next phase of expansions.
He noted that assembly was no less fashionable than manufacturing, since it would help in hitting the volumes which in turn will create scale for the component industry. “We have to hit the volumes through the assembly process, hit the volumes by broadening the product categories. And as we hit the volumes, then you start going deep down to create the skills required for competencies. We are going down a path where we will be on the $300-billion milestone and we will do it by this matrix of broadening categories and deepening them in terms of value," he said.
He added that the government was open to partnering with industry for innovative models of skilling which will lead to people with 80% of the base skills needed to make the industry competitive.
“Talent is really a strategic thought for a corporation or a strategic area of focus for a company or startup or an enterprise in today’s world. It is a competitive advantage," he said.
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