Budget 2022: Sectors That Could Be Benefited From PLI Scheme

The Union Budget 2022 would be a key step for many industries as the budget is being referred a "Growth Budget", and the PLI scheme would be a key factor in the growth. Since the Government of India introduced the PLI (Production-Linked Incentive) Scheme for various sectors and industries in the Country it has become one major source of appreciation for various industries to grow and help the economic boost.

According to the World Bank, the PLI Scheme would likely assist India's economy to develop at 8.7% in the following financial year 2022-23, outpacing emerging market rivals such as China.

It is expected that the budget 2022 would offer benefits to the various sector from PLI Scheme and also could witness the expansion of the scheme for many sectors and industries. Knowing the importance of the scheme, the Confederation of Indian Industry (CII) has also requested that new incentive rates should be incorporated in the PLI scheme depending on the number of jobs generated to boost the economy.

Here, we came up with 5 future-ready sectors that are likely to be benefitted from the scheme in the forthcoming union budget 2022.

Electrolyzers

Electrolyzers for the Production of Green Hydrogen Could Be Included in the PLI Scheme. An electrolyzer, which may be powered by electricity generated from renewable energy sources such as wind and solar, splits water into hydrogen and oxygen to produce green hydrogen gas.

Electrolyser PLI is likely to be calculated based on sales volume, performance multiplier, and a basic PLI quotation of $60 per kilowatt of electrolyzer capacity. During the time of the PLI scheme for electrolyzer manufacture, a cost reduction of $10/kw is predicted per year.

With the PLI scheme, the government's ultimate goal is to reduce the cost of green hydrogen to $1 per kilogram and have a 5 million metric tonne per annum (MMTPA) green hydrogen capacity in India by 2030.

Transformer Equipment Manufacturing

The Union power ministry is considering to introduce a PLI scheme to encourage indigenous manufacturing of power-related equipment. The government is also working on plans to establish three power equipment manufacturing zones throughout the nation.

According to governemnt sources, the new PLI scheme is still in the design phases and will most likely comprise components used in SCADA (Supervisory Control And Data Acquisition) systems, specific cables, and gases used in transformers, all of which are presently mostly imported.

It is being said that a scheme for the three planned power equipment manufacturing zones will be sent to the Union finance ministry for approval. The zones would be established in states with the lowest land prices and electricity tariffs, with an initial budget of Rs 300-400 Cr set aside to create shared infrastructure in each zone.

Solar PV

The Union Cabinet authorized an Rs. 4,500 Cr PLI Scheme in April 2022 to expand domestic solar PV module manufacturing capacity.

The government is set to increase financing under the PLI scheme for domestic solar cell and module manufacturing to 24,000 Cr from the current 4,500 Cr in the coming budget to help India become an exporting nation.

The Union Cabinet adopted the PLI Scheme with the goal of minimizing import dependency in a critical area like power. Solar PV manufacturers will be chosen through a transparent competitive bidding procedure under the plan.

Container

To solve the country's container shortfall, exporters have proposed a container manufacturing incentive program similar to the Production Linked Incentive plan, which aims to boost domestic manufacture by alleviating some of the cost disadvantages.

A PLI-style scheme, according to the Federation of Indian Export Organisations (FIEO), can encourage domestic container manufacturing.

In addition, exporters also expressed their demand for an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) scheme for another year ahead of the Union Budget.

It is also expected that the government may take steps to enhance local manufacturing and enable the country to join the global value chain.

As a result of container shortages and rising logistics costs, the government is likely to take efforts to support the establishment of global shipping lines and enhance container manufacture in India.

EV

EV, a new ecosystem, on the verge of a huge upheaval, is already causing immense competition for the current automobile industry. The industry is getting huge support from the sector players, but also the government.

Industry experts believe that more green transportation solutions will not only benefit the environment, but will also strengthen the technological industry and create numerous employment prospects. The Union Budget 2022-23 will be critical in defining the tone and plan for India's economic recovery in FY 2022-23.

To improve the country's self-reliance and stimulate domestic manufacturing, the government recently expanded the parameters of the PLI plan to include automotive sector enterprises - which is anticipated to be the prelude to the Union Finance Budget. This move is likely to broaden the scope of a PLI scheme for the EV industry, allowing producers to expand their production and export capacities.