According to a CRISIL report, the production-linked incentive (PLI) scheme that aims to promote domestic manufacturing in around 14 sectors has the potential to generate additional revenue worth Rs 35-40 trillion over the next five years.
As per CRISIL’s analysis, most of the new manufacturing should begin over the next 24-30 months that can attract Rs 2-2.7 trillion of capex. Further, CRISIL also sees that the incentive-to-capex ratio is particularly attractive at around 3.5 times for mobile phones, electronics, telecom equipment, and IT hardware where India’s local manufacturing base is relatively low.
Further, the PLI scheme will be one of the key growth drivers of the economy next fiscal along with government spending on key infrastructure, CRISIL said.
Additionally, the report expects capex to jump 45-50 per cent in industrial investments alone in fiscal 2022 after a fall of 35 per cent during the outgoing fiscal and after this, it will moderate to 7 per cent through fiscal 2025. However, this front-loading of capex augurs well for the economy because of its high multiplier effect, the report noted.