Government Schemes and Initiatives to boost Manufacturing Sector in India

Government of India has implemented a number schemes/initiatives to promote/boost the manufacturing sector in India, according to the information given by Shri Som Parkash, Minister of State for Commerce and Industry, in reply to a parliamentary question on December 9, 2022.

The same is apparent from the Manufacturing Sector’s annual growth rate, as measured by the Index of Industrial Production (IIP), which increased from -1.4% (2019–20) to 11.8%. (2021-22). However, it should be noted that the COVID-19 pandemic had a negative impact on manufacturing sector growth; in contrast, the sector experienced double-digit positive growth in the fiscal year 2021–2022.

A. Schemes/ Initiatives of DPIIT (Ministry of Commerce & Industry):

The government of India has launched a number of programmes with the goals of bolstering the country’s manufacturing industry and attracting more investments from within the country and from abroad. These include the introduction of the Goods and Services Tax, a decrease in corporate tax, improvements to the business environment, changes to the FDI policy, steps to ease the burden of compliance, policies to support domestic manufacturing through public procurement orders, and the Phased Manufacturing Program (PMP), to name a few. In addition, there have been steps to ease the burden of compliance.

The government has taken a number of steps to improve the economy and turn the disruption caused by COVID 19 into an opportunity for growth, including the Atmanirbhar packages, the implementation of the Production Linked Incentive (PLI) Scheme in various Ministries, investment opportunities through the National Infrastructure Pipeline (NIP) and the National Monetisation Pipeline (NMP), the India Industrial Land Bank (IILB), the Industrial Park Rating System (IPRS), and the soft launch of the National Single Window System (NSWS). In all concerned Ministries/Departments of the Government of India, an institutional mechanism for expediting investments has been established in the form of Project Development Cells (PDCs).

An investment of INR 1.97 lakh crore (more than US$ 26 billion) has been announced in the Union Budget 2021-22 for PLI schemes for 14 important manufacturing sectors, starting from fiscal year (FY) 2021–2022. This is done in order to support India’s vision of becoming a “Atmanirbhar” and to improve India’s manufacturing capabilities and exports. Over the next five years and beyond, it is anticipated that the PLI Schemes will significantly increase production, skills, employment, economic growth, and exports.

Government reforms have resulted in increased Foreign Direct Investment (FDI) inflows into the country. FDI inflows into India stood at US $ 45.15 billion in 2014-2015 and have steadily increased since then, with India recording its highest annual FDI inflow of US$ 84.84 billion (provisional figures) in fiscal year 2021-22.

According to the Economic Survey 2021-22, despite Covid-related disruptions, there is a trend of positive overall growth in the manufacturing sector’s Gross Value Addition (GVA). The total number of people employed in this sector has risen from 57 million in 2017-18 to 62.4 million in 2019-20. The following are some of the major initiatives/schemes:

Make in India initiative:

The “Make in India” initiative, which was introduced on September 25, 2014, aims to promote investment, encourage innovation, create world-class infrastructure, and turn India into a centre for manufacturing, design, and innovation. It was a standout local or vocal for local initiative that helped to advertise manufacturing in India around the world. The “Make in India” initiative is being implemented all across the nation, not just in certain states, districts, cities, or regions.

Industrial Corridor Development Programme:

To accelerate manufacturing growth, the Government of India (GoI) has adopted a strategy of developing Industrial Corridors in collaboration with state governments. The goal of this programme is to create Greenfield Industrial regions/areas/nodes with sustainable infrastructure and to make Plug and Play Infrastructure available at the plot level. Eleven industrial corridors are being developed in four stages as part of the National Industrial Corridor Program.

Ease of Doing Business:

The goal is to improve the Ease of Doing Business as well as the Ease of Living by Simplifying, Rationalizing, Digitizing, and Decriminalizing Government to Business and Citizen Interfaces across all Ministries, States, and UTs. The initiative’s primary areas of focus are the rationalisation of legal provisions; the simplification of procedures; the digitization of government processes; and the decriminalisation of minor, technical, or procedural defaults.

National Single Window System:

With the intention of providing “end to end” facilitation and support to investors, including pre-investment advisory, providing information related to land banks, and facilitating clearances at the Center and State level, the establishment of the National Single Window System (NSWS) was announced in the Budget 2020–21. The National Single Window System (NSWS), designed as a one-stop shop for investor-related approvals and services in the nation, was soft-launched on September 22, 2021 by the honourable commerce and industry minister. A large number of Single Window Systems for States and UTs have been connected to the NSWS Portal, making it possible to access the approvals of these States and UTs for applications made through NSWS.

PM Gati Shakti National Master Plan (NMP):

The PM Gati Shakti National Master Plan (NMP), a GIS-based platform that includes portals for a number of different government Ministries and Departments, was made available to the public in October of 2021. When it comes to integrated multimodal infrastructure planning, making decisions based on data rather than intuition is a transformative strategy that will result in lower logistics costs. Institutional arrangements have been made for both the Network Planning Group (NPG) and the Empowered Group of Secretaries (EGoS), respectively. Approximately two thousand data layers have been uploaded to the NMP so far from a variety of central ministries, state government departments, and other sources.

On April 6, 2022, the Ministry of Finance, Department of Expenditure added an additional provision of Rs. 1,00,000 crore for distribution among the states as long term loans with a zero interest rate in order to support increased capital expenditure by states for infrastructure development. Out of this, Rs 5,000 crore are specifically allocated under Part II of the scheme for PM GatiShakti-related expenses.

National Logistics Policy:

On September 17th, 2022, the Government of India unveiled a new policy called the National Logistics Policy (NLP), which aims to bring the country’s logistics costs in line with those of other developed nations. It’s an all-out attempt to reduce wasteful spending by establishing a comprehensive interdisciplinary, cross-sectoral, and multi-jurisdictional framework for growing the logistics industry as a whole. Increased economic growth, new job opportunities, and increased international competitiveness for Indian exports are all possible results of this policy change.

Production Linked Incentive scheme:

Production Linked Incentive (PLI) Schemes for 14 key sectors have been announced with an outlay of Rs. 1.97 lakh crore to enhance India’s Manufacturing capabilities and Exports. These schemes were announced with the goal of keeping India’s vision of becoming “Atmanirbhar” in mind. Over the course of the next five years and beyond, these schemes have the potential to generate high production, economic growth, exports, and significant employment opportunities.

Indian Footwear and Leather Development Programme (IFLDP):

In January of 2022, the Central Government approved the Central Sector Scheme “Indian Footwear and Leather Development Programme (IFLDP)” with an allocation of Rs. 1700 crore until March 31, 2026 or until a subsequent review, whichever comes first.

North East Industrial and Investment Promotion Policy (NEIIPP), 2007:

The North East Industrial and Investment Promotion Policy (NEIIPP), 2007, which was notified for a period of ten years beginning on April 1, 2007, and ending on March 31, 2017, was created with the intention of promoting the region’s industrialization. In accordance with the grand-parenting of the scheme, the registered eligible units will continue to receive benefits. During the course of the previous three years, the NER Schemes dispersed a total of Rs. 963.53 crore worth of funds or subsidies.

North East Industrial Development Scheme (NEIDS), 2017:

A new scheme, North East Industrial Development Scheme (NEIDS), 2017, came into force on April 1, 2017 for a five-year period to promote industrialization in NE States and boost employment and income generation. The scheme applied to the manufacturing and service sectors. Subsidies totaling Rs. 46 crores were made available under the NEIDS up to FY 2021-22.

Special Industrial Packages for States/ UTs:

Industrial schemes that cover the manufacturing and service sectors were also launched in the UTs of Jammu and Kashmir and Ladakh, as well as in the states of Himachal Pradesh and Uttarakhand.

B. Schemes/ Initiatives of other Departments/ Ministries of GOI:

Schemes undertaken by other Ministries/ Departments of Government of India to promote manufacturing sector are as under:

Promotion of Bulk Drug Parks

The Scheme for Promotion of Bulk Drug Parks, which has a financial outlay of Rs. 3,000 crores and a tenure from FY 2020-21 to FY 2024-25, offers financial assistance to three States for the establishment of Bulk Drug Parks.

Strengthening of Pharmaceutical Industry (SPI)

The Strengthening of Pharmaceutical Industry (SPI) scheme was launched with an initial financial outlay of 500 crores of rupees and a tenure from fiscal year 2021-2022 to fiscal year 2025-2026 to provide infrastructure support for pharmaceutical micro, small, and medium-sized enterprises (MSMEs) in clusters and to address the issues of technology upgradation facing individual pharma MSMEs.

Promotion of Medical Devices Parks

The states of Uttar Pradesh, Tamil Nadu, Madhya Pradesh, and Himachal Pradesh have received final approval for financial assistance of Rs. 100 crore each under the “Promotion of Medical Devices Parks” programme in order to establish common facilities within their respective Medical Device Parks.

Modified Programme for Semiconductors and Display Manufacturing Ecosystem:

A comprehensive programme for the development of the semiconductors and display manufacturing ecosystem in India was approved by the Government of India with an outlay of 76,000 crore (>10 billion USD). This was done in furtherance of the vision of Aatmanirbhar Bharat and positioning India as the global hub for Electronics System Design and Manufacturing. In addition, this programme will help position India as the global hub for Electronics System Design and Manufacturing. The Program included a variety of different plans to entice investments in the manufacturing of displays and semiconductors.

FAME-India Scheme (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles):

FAME-India Scheme-Phase I, which stands for “Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India,” was put into effect on April 1, 2015 for a period of two years, after which it was extended to March 31, 2019, in order to promote the manufacturing of electric and hybrid vehicle technology and to ensure the sustainable growth of the same. The overall expenditure for Phase I of the FAME-India Scheme has been increased from 795 Crore to 895 Crore.

The FAME-India Phase-II scheme intends to give electric vehicles (EVs) in public transport a boost, and it also intends to encourage the adoption of EVs by means of market creation and demand aggregation. The plan is to give EVs a push in public transport.

Udyami Bharat Scheme:

“Udyami Bharat” is a reflection of the government’s unwavering commitment, right from the beginning, to work toward the empowerment of micro, small, and medium-sized businesses (MSMEs). MUDRA Yojana, the Emergency Credit Line Guarantee Scheme, and the Scheme of Fund for Regeneration of Traditional Industries (SFURTI), as well as a number of other programmes, have been introduced by the government at various points in time in order to provide the MSME sector with the necessary and timely support. As a result, crores of people all over the country have benefited from these programmes. The purpose of the “Raising and Accelerating MSME Performance” (RAMP) scheme, which has a budget of approximately 6,000 crore rupees, is to increase the implementation capacity and coverage of micro, small, and medium-sized enterprises (MSMEs) in the states, as well as to improve the impact of existing MSME schemes.

PM Mega Integrated Textile Region and Apparel (PM MITRA):

The Ministry of Textiles issued a notification to establish 7 Mega Integrated Textile Region and Apparel (PM MITRA) Parks with a total outlay of Rs. 4,445 crore in order to have world-class industrial infrastructure that would attract cutting-edge technology and boost FDI and local investment in the textiles sector. These parks will provide an opportunity to create an integrated textiles value chain from spinning to weaving, processing/dyeing, and printing, all in one location. The PM MITRA scheme aims to place India prominently on the global textiles map.