PLI program to account for 13-15% of investments in key sectors over 3-4 years: Crisil

“Nearly 60% of capital spending already approved, with major spending planned in FY23-26”

“Nearly 60% of capital spending already approved, with major spending planned in FY23-26”

According to a report by Crisil, the Production Linked Incentive (PLI) program will account for 13-15% of average annual capital expenditures in major industry sectors over the next three to four years.

Since its inception in March 2020, the 15-sector PLI program has been announced, which includes government incentives of 1.93 lakhcrore. Of this, 50-60% will be spent on domestic manufacturing and export-focused sectors, with the remainder on import localization.

“Implementation of the Production Linked Incentive (PLI) program will result in a potential capital expenditure (Capex) of 2.5-3 lakh crore over the program period and will account for 13-15% of the average annual capital expenditure in key industrial sectors over the next 3-4 years,” the rating agency said in a report released on Wednesday.

PLI is now ready for rapid onsite execution with nearly 60% of capital expenditures approved and major expenditures planned for FY23-FY26. Capital spending has been approved for 10 sectors, it said.

While capital spending has already started in the mobile, pharmaceutical and telecoms sectors, investments in capital-intensive sectors such as autos and photovoltaics – which account for 70% of committed investments – will start from April 2022, the agency said.

The program has attracted interest from more than 900 stakeholders from all sectors, of which around 350 have received approval so far.

Crisil director Hetal Gandhi said PLI will drive green investment in India, with about 55% of the program expected to be green, in sectors such as electric vehicles/fuel cell electric vehicles and solar photovoltaic.

The report states that in addition to supply chain integration, PLI will also support export.

Of the 15 sectors, nine have export potential of between $20 and 80% of the incremental revenue generated, the agency said, adding that this in turn could create an annual export potential of 2 lakh crore, or 6% of total calendar year 2021 exports.

Sectors that could benefit from exports include cellphones, pharmaceuticals, food processing, IT hardware, home appliances and specialty steel, the agency said.

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