Evaluation of the Production-Linked Incentive (PLI) Scheme's Impact on Job Creation

The Government’s flagship Production-Linked Incentive (PLI) scheme, introduced to bolster domestic manufacturing, has shown mixed results in terms of job creation across its targeted sectors. While some industries have performed well, others are lagging behind their intended objectives.

Background

Data obtained through RTI indicates varied performance across sectors:

• Success Stories: Mobile phones, food processing, and pharmaceuticals have exceeded expectations.
• Underperforming Sectors: Automobiles, IT hardware, specialty steel, advanced chemical cells, and textiles have struggled to gain traction.

Key Takeaways

• The PLI scheme spans 14 sectors, including textiles, ACC battery storage, solar modules, automobiles, IT hardware, specialty steel, mobile phones, telecom, medical devices, white goods, pharmaceuticals, food processing, drones, and drug intermediates.
• Aimed at driving domestic manufacturing and generating employment, the scheme has achieved partial success.

Job Creation Performance

1. Overall Impact:

   • Jobs Created: 5.84 lakh direct jobs as of June 2024.
   • Target Achievement: This represents 36% of the total 16.2 lakh jobs targeted for the next five years.

2. Sector-wise Performance:

   • Mobile Phones (Large-Scale Electronics):
     • Jobs Created: 1.22 lakh.
     • Significant contributors include Apple’s contract assemblers like Foxconn, shifting production from China to India.
   • Food Processing:
     • Jobs Created: 2.45 lakh (nearly achieving its 2026-27 target of 2.5 lakh jobs).
   • Pharmaceuticals:
     • Strong contribution to employment, with consistent growth.

Underperforming Sectors

• Automobiles and Auto Components:

  • Jobs Created: 32,081 against a five-year target of 1.45 lakh.

• Solar Modules:

  • Jobs Created: 9,521, far below the five-year target of 1.95 lakh.

• Textiles:

  • Target: 2.5 lakh jobs by 2026.
  • Actual: Only 12,607 jobs created as of June 2024.
  • Challenges: Stakeholders highlight eligibility criteria that limit smaller players.

• Advanced Chemical Cells (ACC):

  • Aims to establish giga-scale battery facilities.
  • Actual Jobs Created: 802 (as production is yet to begin).
  • Key Players: Ola, Reliance Industries, among others.

• Specialty Steel and IT Hardware:

  • Progress remains slow, with employment targets unmet.

Conclusion

The PLI scheme has demonstrated its potential in sectors like mobile phones, food processing, and pharmaceuticals, driving job creation and fostering India’s manufacturing base. However, the underperformance in critical sectors such as textiles, ACC, and IT hardware underscores the need for revisiting implementation strategies, easing eligibility requirements, and addressing bottlenecks to achieve the scheme’s broader objectives.