The government is planning to save about Rs 35,000 crore to help manage the fiscal load put by the production-linked incentive (PLI) and phased manufacturing programme (PMP) schemes, its initiatives to attract investment into the country.
Highly-placed government sources told CNBC-TV18 that this savings will be achieved by the transition from MEIS to Remission of Duties and Taxes on Exported Products (RoDTEP), which is likely to lead to Rs 3,08,624 crore in savings between FY21 and FY26 -- about Rs 34,666 crore in the current fiscal.
"To usher in investments in the country, the government is planning to keep a financial outlay of Rs 2,18,481 crore between FY21 and FY26, which is the five-year period to promote PLI schemes," sources said and added that with regards to RoDTEP, the benefits that are likely to be given to exporters between FY21 and FY26 is estimated at Rs 77,156 crore.
Although these are part of the initial proposal, it will be announced formally soon, sources added.
CNBC-TV18 was first to report that the government is looking at a three-pronged strategy to attract investments in the country over the next five years to boost the economy. According to this strategy, the government is likely to come up with sector-specific PLI schemes and PMP to protect the domestic industry and a comprehensive review of free trade agreements.
Auto and components, large electronics manufacturing projects are poised to get highest allocation of PLI, with the benefit of an outgo for FY21 at an estimated Rs 5,334 crore.
CNBC-TV18 had first reported that Niti Aayog is likely to move a cabinet note on an umbrella policy framework on the proposed PLI scheme, which would lay out the 10 sectors identified by the government which have massive manufacturing potential.
According to sources, "The proposed sectoral PLI benefits between FY21 and FY26 are pegged at Rs 57,042 crore for auto and components, Rs 40,951 crore for the large electronics manufacturing, which has already been approved by the government.
Similarly, Rs 30,000 crore has been proposed for specialised pharma products, Rs18,100 crore for battery storage and Rs 15,195 crore for telecom and networking products.
"Rs 15,400 crore for the food processing sector, Rs 10,683 crore for greenfield textile projects, Rs 6,322 crore for the speciality steel sector and Rs 4,500 crore for the solar PV module too have been planned and kept aside," sources said.
"The government also feels that white goods segment, especially the air conditioners and LED TVs have a huge potential to boost manufacturing and a PLI support of Rs 6,238 crore," sources said.
"Other important sectors where the PLI benefits have been announced and approved already are Rs 5,630 crore for pharma API and key starting raw materials (KSM), Rs 3,420 cr for medical devices and Rs 5,000 crore for electronics (laptops, IoT, computer hardware), this will give an initial fillip to the manufacturing economy," sources said.