Approach:

Introduction: Show how Manufacturing led growth is crucial for an economy.

Body: Show how Atmanirbhar Bharat and PLI schemes are going to support the Manufacturing sector in India followed by

Conclusion: Give a way forward

Answer:  

Manufacturing-led growth is crucial for sustainable, inclusive and job-full growth of India while achieving the goals of Make in India and to achieve the vision of a 5 trillion-dollar economy.

Atmanirbhar Bharat aims to achieve the same by working on five pillars i.e., Economy, Infrastructure, System, Vibrant Demography and Demand. PLI scheme seeks to achieve a competitive and efficient manufacturing sector, attract investment etc.

Atmanirbhar Bharat and PLI schemes strengthening Manufacturing in India:

1. Atmanirbhar Bharat Abhiyaan and the Special economic package of INR 20 lakh crores - 10% of India’s GDP – to attract conglomerates, and manufacturers moving out of China in the wake of the COVID-19 Pandemic.
2. The aim is to make the country and its citizens self-reliant, initiate manufacturing-led growth, cut unnecessary imports, build resilience, becoming part of global supply chains
3. Initiatives like the Fund of Funds for Startups, which provides funding support to startups, and the National Technical Textiles Mission, which focuses on promoting the domestic production of technical textiles.

1. The PLI scheme is being implemented to enhance India's manufacturing capabilities, increase exports, and promote the growth of domestic industry.
2. Under the PLI scheme, eligible companies receive financial incentives based on incremental sales of locally manufactured goods.

Eg automobile and auto components, pharmaceuticals, telecom, advanced chemistry cell (ACC) batteries, textile sectors etc.

1. The scheme provides financial incentives of up to-
1. 6% of incremental sales for the first two years
2. 5% for the third year, and
3. 4% for the fourth and fifth years.
4. The government has allocated over Rs. 1.96 lakh crore for the PLI scheme over five years.

However, there are some challenges:

1. Stringent eligibility criteria: The eligibility criteria for the PLI scheme may be too stringent for some companies, particularly SMEs. This may prevent SMEs from accessing the benefits of the scheme and hinder their growth.
2. Meeting targets: The targets set under the PLI scheme may be difficult to achieve. The process of meeting the targets may be further complicated by market fluctuations, supply chain disruptions, and other external factors.
3. Limited financial resources: Though the government has allocated a significant amount of funds for the PLI scheme, it may not be enough to meet the demand for incentives in all sectors. This may lead to a situation where some eligible companies do not receive the full amount of incentives they are entitled to.
4. Limited scope: The PLI scheme is currently limited to a few sectors, which means that other sectors are not receiving the same level of attention. Eg. the PLI scheme for IT hardware was a laggard with only two companies managing to meet the first year’s (FY22) targets

However, the government is proactively engaging with all the stakeholders to regularly tweak and update the PLI scheme Eg. In PLI 2.0- IT hardware, the Centre has approved a revised PLI scheme with INR 17,000 cr outlay which could attract big global IT hardware manufacturers to shift their production base to India and give a boost to local production of laptops, servers and personal computers among others.