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PLI scheme is a masterstroke–it would reduce dependence on China and add billions to India’s GDP: SBI report

All eyes on India's PLI scheme

Adequately leveraging the Narendra Modi government’s production-linked incentive (PLI) scheme would help India add billions into its gross domestic product.

The State Bank of India’s (SBI) ecowrap—its economic report—said, “If by leveraging PLI scheme we can reduce our dependence on China even to the extent of 20%, then we can add around $8 billion to our GDP.”

It added that over a period of time if India’s dependence is further reduced by 50 per cent a $20 billion would be added to the GDP.

According to the report, in FY21 of $65 billion of imports from China, around $39.5 billion comprised commodities and goods where the PLI scheme has been announced. These include sectors such as textile, agri, electronics goods, pharmaceuticals and chemicals.

Also read: Taiwan electronics giant Foxconn forms JV to make chips in India

Last year, the Centre gave its nod for a Rs 76,000 crore PLI scheme aimed at developing the semiconductor and display manufacturing ecosystem.

The report also noted that the Asian Development Bank’s Global Value Chain (GVC) Development Report 2021 showed that India’s participation has improved over the years in production-based GVC. “The good thing is that there has been a significant improvement in case of medium to high technology manufacturing,” it said.

When compared to China, India’s participation is higher in case of both trade based and production based GVC, the report said, adding that New Delhi must focus on building the right infrastructure which can help in making the country’s exports more cost competitive.

Earlier, presenting the Union Budget, Finance Minister Nirmala Sitharaman said that PLI scheme boosting ‘Make in India’ will create 60 lakh new jobs and additional production of 30 lakh crore in the next five years.