Policy boost for aircraft, ships, railways
The government has started work on giving a policy boost to the manufacture of aircraft, ships and railway components under the ‘make in India' drive with the goal of attracting investments and speeding up job creation, three people informed about the discussions said.
The idea is to create a policy package for these sectors which could include production linked incentives and viability gap funding.
With the political leadership busy in elections and a code of conduct in place, officials are doing the groundwork on proposals which could be taken up after the national polls, said one of the persons quoted above.
Giving a boost to manufacturing to propel India into a middle-income economy and then to a developed one is part of the economic agenda of both the ruling BJP and the opposition Congress party because of the sector’s potential to create jobs.
For the ruling party, it is central to its 100-day agenda it plans to implement if voted back to power, said the person quoted above. “Production linked incentives for these sectors are being explored,” said the person, who spoke on condition of anonymity.
Manufacturing remains key to India’s growth strategy as the agriculturebased economy transitioned to a services-led one without the second phase of development—manufacturing led growth—failing to take off in a big way in spite of successive governments trying to raise the share of manufacturing in the economic output.
Though about 55% of India’s workforce is engaged in agriculture, it accounted for only about 17.5% of gross value added in the economy at current prices during FY24. “A significant expansion of manufacturing activities is required in the country to pull out people from low-paid agriculture jobs to relatively better paid employment,” said Devendra Kumar Pant, chief economist at India Ratings and Research.
A slew of production-linked incentive (PLI) schemes tailored for manufacturing import substitution products, components and large-scale manufacturing of high-end trains, metros, ships and domestically built passenger aircraft are in the offing, said a second person, who also spoke on condition of not being named.
While the plan for infrastructure push in manufacturing may be taken up immediately after the elections, programmes on making India a global hub for manufacturing high-end and technically superior products would be implemented in phases with partial government support in the form of viability gap funding (VGF).
This would help to create centres of excellence in manufacturing in various critical infrastructure products, while projecting India as an attractive alternative to traditional manufacturing powerhouses. One of the plans is to have a PLI scheme for train component manufacturing.
Dhirendra Kumar also contributed to the story.
The idea is to create a policy package for these sectors which could include PLI and viability gap funding