1 / 13

Production Linked Incentive Scheme

AMCHAM organized a webinar on u2018Production Linked Incentive (PLI) Scheme: Opportunities for U.S. Companiesu2019 on March 16th. Ms. Ranjana Khanna, Director General CEO, AMCHAM welcomed participants and gave a brief introduction to the scheme.

amchamindia
Download Presentation

Production Linked Incentive Scheme

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Production Linked Production Linked Incentive Scheme Incentive Scheme March 2022 © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. home.kpmg/in 1

  2. Vision behind PLI Scheme 01 01 03 03 05 05 02 02 04 04 Help India be an integral part of global supply chain Attract investment in core competency areas Focus on building manufacturing ecosystem in India Aim to make India an export hub Atmanirbhar Bharat & Make in India © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 2

  3. PLI Scheme Simple and direct incentives based on incremental sales Focus on attracting large investments Key features of PLI Schemes Non-tariff measure to compete more effectively with cheap imports Simplified application procedure © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 3

  4. Objectives & Expectations Objectives Expectations • Incremental turnover: ~ USD 500 bn Select few and make them torch bearers • Investment: USD 30 bn by FY25 Identify sectors and products • Global scale production facilities Unique evaluation - percentile • Export promotion & import substitution Empowered bureaucracy • Align industrial development with global trends including ESG Other benefits continue © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 4

  5. General parameters Sector specific Fixed Threshold Investment Incentive on Net Incremental Sales or cost reimbursement Requirement to meet the prescribed domestic value addition Conditions regarding exports to be fulfilled, depending on scheme to scheme Cumulative employment generation Manufacturing capacity & extent of integration Minimum Compound Annual Growth Rate (CAGR) in sales Specified category of products with minimum sales * Please note, these are general parameters of a particular scheme and actual parameters vary from scheme to scheme © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 5

  6. Why evaluate PLI Total identified 14 sectors Substantial incentive percentage Adequate budgetary provision Competitor analysis – If not me someone else Re-engineering supply chain © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 6

  7. Status of PLI Schemes Large Scale Electronics Manufacturing Food Processing Industry Manufacturing Of Medical Devices Advance Chemistry Cell (ACC) Battery Closed Closed Closed Closed Information Technology Hardware Automobiles & Auto Components Pharmaceuticals Drugs 2.0 Telecom & Networking Products Closed Closed Closed Closed Textile Products: MMF Segment and Technical Textiles Design-led manufacturing for augmenting infrastructure for 5G TBN High Efficiency Solar PV Modules Semi-conductors and display fabs Closed Closed* Closed White Goods (ACs & LED) Pharma 1.0 - API/KSMs/DIs Drones and Drone Components Specialty Steel Open for specified APIs Open Open Open * Likely to be re-opened © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Open/Closed/TBN (To Be Notified) 7

  8. Success of notified PLI schemes Resounding success of PLI schemes Large no of applications received from various players Significant investments committed by applicants Augment production and raise direct employments PLI schemes have been a huge success Selected Applicants of Key PLI schemes • Large Scale Electronics Manufacturing: 16 applicants selected including Samsung, Foxconn, Pegatron, Lava, Micromax • Auto: 95 applicants selected for OEM Champion and Component scheme including Suzuki Motors, Mahindra, Maruti Suzuki • Pharmaceuticals: 55 applicants selected including Sun Pharmaceutical, Dr. Reddy’s Laboratories, Lupin • Food: Total 143 applicants selected including Britannia, Haldiram, ITC, HUL, Nestle, Dabur, Parag Milk Foods • IT Hardware: 14 applicants selected including Dell, ICT, Rising Stars, Lava, Dixon, Micromax • White Goods: 42 applicants selected including Daikin Airconditioning, Hindalco Industries, Havells India © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 8

  9. Boost to Conventional and Unconventional players Conventional Players Unconventional Players » Samsung » Axis Clean Mobility Private Limited » Maruti Suzuki India Limited » Booma Innovative Transport Solutions Private Limited » Foxconn » Elest Private Limited » Dell » Hop Electric Manufacturing Private Limited » Britannia Industries Limited » Nestle India Limited » Ola Electric Technologies Private Limited » Cipla Limited » Powerhaul Vehicle Private Limited © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 9

  10. Picture so far Initial plan of the Government 01 • PLIs announced for 13 sectors • Incentive earmarked INR 1.97 lakh crores or USD 26 bn Actual Plan • Total PLI schemes announced till date: 13+1 02 • Revised incentive earmarked: INR 2.92 lakh crores or USD 38.2 bn • Applicants selected: ~500 across PLI schemes • Investment committed by applicants: INR 3.86 lakh crores (includes committed and expected) • Range of incentives as a percentage of turnover: From 1%-50% Future plan 03 • PLIs still open: Drones, Pharma 1.0, Steel, White Goods and Solar (additional outlay) • Scheme yet to be announced: Design led manufacturing for 5G • Sectors still to be tapped: Aerospace, Defence, R&D, capital goods etc. © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 10

  11. Thoughts for the road PLI to be looked in the context not in isolation • Income tax rate – New manufacturing companies eligible for reduced rate of 15% • Removal of SEZ holidays – WTO impact • Phased manufacturing programmes – selective tariff incentives • State incentives, sectoral schemes by Central Government Not a one-time programme • Budget not exhausted • Government focus on capex in budget 2022 • Need to align sector objectives with Government objectives • Focus not only on Centre, but also on States Active interaction with Government is the key © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 11

  12. Q&A © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 12

  13. Thank you Follow us on: home.kpmg/in/socialmedia The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. KPMG Assurance and Consulting Services LLP, Lodha Excelus, Apollo Mills Compound, NM Joshi Marg, Mahalaxmi, Mumbai - 400 011 Phone: +91 22 3989 6000, Fax: +91 22 3983 6000. © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. This document is for e-communication only.

More Related