Active Stocks
Fri Apr 19 2024 15:56:00
  1. Tata Steel share price
  2. 162.10 1.31%
  1. Tata Motors share price
  2. 963.20 -0.84%
  1. NTPC share price
  2. 350.90 -0.14%
  1. ITC share price
  2. 424.80 1.40%
  1. Power Grid Corporation Of India share price
  2. 281.70 0.54%
Business News/ News / India/  PLI scheme has potential to add 4% to India's GDP annually, here's why
BackBack

PLI scheme has potential to add 4% to India's GDP annually, here's why

Registration of manufacturing companies has jumped to its highest-ever levels in the last seven years, the report also added, that the share of manufacturing companies in total registrations neared its highest level in the past decade.

PLI scheme has seen maximum response from the electronics, auto components, and pharma sectors. Premium
PLI scheme has seen maximum response from the electronics, auto components, and pharma sectors. 

The production-linked incentives (PLI) scheme which is expected to boost the manufacturing sector has the potential to 4% to GDP per annum in terms of incremental revenues. The scheme which is aimed to offering nearly 2.4 lakh crore incentives in key business areas over the next five years, has seen maximum response from the electronics, auto components, and pharma sectors, according to Emkay Investment Managers.

According to the Emkay Global research report cited by PTI, stated that manufacturing companies are adding capacities due to robust returns and this is evident from the number of new manufacturing companies registered.

Registration of manufacturing companies has jumped to its highest-ever levels in the last seven years, the report also added, that the share of manufacturing companies in total registrations neared its highest level in the past decade.

Further, as per the report, the number of environmental clearances sought and granted also stood at its highest ever in FY22 - which was 10x of FY15.

As per the report, in the past domestic manufacturing took a beating due to demonetisation, badly rolled out GST, and the Covid-19 pandemic which led to nationwide lockdown dampening consumer demand. Thereby, manufacturing companies have been reporting dismal RoCEs (return on capital employed) till FY18.

However, ROCEs have now improved to about 20% in FY22 boosted by tighter working capital cycles, while the cash return on capital employed came in highest in the financial year.

Also, the report said that the difference between cash ROCE and comparable investment is one of the highest and the attractiveness of cash returns coupled with better capacity utilization has put manufacturers on the front foot.

Vikaas M Sachdeva, the CEO of Emkay Investment Managers, which is a subsidiary of Emkay Global said that another enabling factor is rupee depreciation against the Chinese yuan, making India more competitive on the manufacturing front, and the key beneficiaries of these developments are auto and auto components, textiles, chemicals, and capital goods.

In the Union Budget 2022-23, Finance Minister Nirmala Sitharaman said that PLI Schemes have the potential to create an additional production of 30 lakh crore.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 05 Jul 2022, 08:20 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App