Modified PLI, export incentives in works for small & medium units

The government could roll out a modified production-linked incentive scheme along with incentives for exports and employment generation for medium enterprises. The move is aimed at incentivising small units in the MSME category to scale up operations to move into the medium category and generate more employment while integrating them with the global value chain.

The idea is to significantly enhance the number of medium enterprises in the country, which currently constitutes a miniscule 0.01% of the total MSMEs in India, a senior government official told ET.

He said the NITI Aayog is firming up a policy framework in this regard. The policy could cover medium units from sectors including engineering, electrical, chemical and pharmaceuticals.

“The government is of the view that the existing MSME policy needs a bit of alignment including a different form of production-linked incentive scheme and direct incentives for certain sectors to help units expand and move into the medium category,” the official added.

The draft policy is expected to be firmed up soon, following which the Aayog will seek views of the stakeholders before finalising it.

The government had in March 2020 rolled out the first three PLI schemes for electronic and technology products, pharma, and telecom and networking products, which was later expanded taking the total number to 14.

“If India wants employment generation, we have to incentivise medium-sized enterprises to expand, either through a dedicated PLI scheme for them or other incentives,” said Anil Bharadwaj, secretary general at Federation of Indian Micro and Small & Medium Enterprises, adding that current PLI scheme is targeted at capital incentive manufacturing, which is more automated.

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