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Budget 2024: Govt to focus on Make in India initiative to boost manufacturing

The government is considering expanding the Production-Linked Incentive (PLI) scheme in the upcoming interim budget, aiming to boost the manufacturing sector and employment. Sectors like garments, jewellery, and handicrafts may be included in the PLI scheme, currently available for 14 sectors.

Edited By: Nitin Kumar @Niitz1 New Delhi Published on: January 21, 2024 23:08 IST
manufacturing
Image Source : FREEPIK A factory workshop interior and machines in a glass production background.

To incentivise the manufacturing sector and generate employment, the government may extend the scope of the Production-Linked Incentive (PLI) scheme in the upcoming budget. The interim budget for 2023–24 is scheduled to be presented by Finance Minister Nirmala Sitharaman on February 1. The government is planning to include sectors like garments, jewellery and handicrafts in the forthcoming interim budget. Currently, the Production-Linked Incentive (PLI) scheme, which was announced in 2021 by the government, is available for 14 sectors.

The government is expected to come out with measures to support sustainable growth in income amongst rural households, thereby boosting the rural economy's disposable income. According to Nidhi Aggarwal, founder of SpaceMantra, PLI schemes have generated employment opportunities, and that will likely continue.

"The focus will likely remain on Make in India's momentum. GST rationalisation, easier credit flows, and capex incentives will be in the focus when FM Nirmala Sitharaman tables the budget," she said.

The budget will double down on infrastructure momentum to enable efficient logistics for Make in India. 

The upcoming budget is expected to allocate a substantial amount for capital expenditure, as it has a multiplier effect on the economy. 

Zameer Malik, CEO of Kulsum's Kaya Kalp, said that the government is expected to continue prioritizing capital expenditure, particularly in the infrastructure sector, to drive economic growth.

"While export incentives remain pending, continued plugging of gaps in roads, rails, and regulations will organically foster wider manufacturing competitiveness. Tax stability also encourages production planning cycles even as consumption receives bottom-up boosts," Malik said.

Notably, the government had allocated a record high of Rs 10 lakh crore for capex during the current financial year. As per the PTI report, allocation has seen a consistent increase, with Rs 4.39 lakh crore in 2020–21, Rs 5.54 lakh crore in the following year (2021–22), and Rs 7.5 lakh crore in 2022–23.

Gurmit Singh Arora, president of the Indian Plumbing Association, said that the budget extends income support tailwinds for domestic consumption while leaving export incentivisation unaddressed.

"The growing local demand forms reliable insulation even as global headwinds persist. While big policy catalysts would have provided adrenaline shots, the incremental spirit keeps sufficient manufacturing momentum amid cyclical risks," he said.

In the past few years, India, under the Modi government, has attracted significant interest as a manufacturing hub. The government has played a crucial role in creating a business-friendly environment, thus attracting private investment. With the growth of the economy, there has been a significant jump in private investment in various sectors.

Also read | FPI's turn cautious, pull out equities worth Rs 13,000 amid high valuations, rising US bond yields

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