Welcome back to MANUFAST’s Blog. This blog is the part 2 of our previous blog on the government policies to grow manufacturing sector in India.
You can read it by clicking this link. Read Part 1
So, Lets Begin the Part 2.
National Logistics Policy:
The National Logistics Policy (NLP) aims to enhance India’s logistics sector by addressing its high costs and inefficiencies. It establishes a framework for growth, promoting competitiveness, economic expansion, and job creation. The NLP targets reducing logistics costs from 14% to below 10% of GDP by 2022. It is part of the PM GatiShakti National Master Plan (NMP), which focuses on multimodal connectivity and infrastructure development. Through improvements in infrastructure, digital systems, regulations, and human resources, the NLP intends to boost the efficiency of logistics operations. This, in turn, is expected to attract more investments, create job opportunities, and make India an attractive destination for foreign investors.
Objectives of National Logistics Policy:
National logistics policy strives to establish a single point of contact for all trade- and logistics-related issues. This policy’s primary goal is to reduce the cost of logistics and establish a productive logistics ecosystem that supports the efficient flow of commodities across the nation.
The NLP aims to enhance logistics industry effectiveness through an integrated framework. It includes infrastructure development, digitalization, and skill development. It also focuses on eco-friendly practices and reducing emissions.
The NLP aims to enhance business accessibility, competitiveness, and employment in logistics. It promotes multimodal transportation, cost reduction, and improved efficiency of the logistics ecosystem.
Overall, the National Logistics Policy aims to create a world-class logistics infrastructure in India that can support the growth of the economy and improve the quality of life for its citizens.
Benefits of National Logistics Policy:
The Indian government’s National Logistics Policy is anticipated to have a variety of beneficial impacts on both the logistics industry and the economy as a whole. The following are a few of the policy’s major benefits:
- Cost reduction: The policy aims to lower logistics expenses, increasing competitiveness and exports.
- Efficiency and reliability: Emphasis on technology, multimodal transport, and last-mile connectivity for improved logistics services.
- Business-friendly environment: Simplified regulations to facilitate logistics operations and enhance ease of doing business.
- Job creation: Focus on workforce development to generate employment opportunities in the logistics sector.
- Sustainable logistics: Promotion of environmentally-friendly practices in logistics operations.
- Improved quality of life: Development of high-quality logistics infrastructure to reduce travel time and expenses, enhancing people’s standard of living.
Production Linked Incentive scheme:
The PLI program rewards businesses for domestic sales and aims to attract foreign and domestic investments, creating jobs in India. It promotes the “Made in India” mission and global manufacturing. With a budget of INR 1970 billion (US$26.48 billion), it focuses on enhancing local supply chains, encouraging high-tech manufacturing, and introducing new businesses. The incentives are valid for five years starting April 1, 2022. It is expected to attract investments of Rs 7,920 crore and increase white goods production by Rs 1.68 lakh crore..
The PLI scheme has positive industry feedback and is expected to attract significant investments. It supports Make in India and India’s global manufacturing ambitions. It is part of a broader plan to promote domestic manufacturing, reduce imports, and drive long-term economic growth, creating job opportunities.
Objectives of Production Linked Incentive (PLI):
The Indian government has launched the Production Linked Incentive (PLI) scheme in an effort to increase domestic manufacturing and draw international capital to strategic industries. The PLI scheme’s primary goals are:
- Boosting domestic output: PLI aims to reduce import reliance by incentivizing domestic production in industries like electronics, pharmaceuticals, and automobiles.
- Enhancing exports: The scheme promotes export competitiveness by incentivizing the development of internationally compliant goods.
- Creating jobs: PLI generates employment opportunities throughout the value chain, from manufacturing to distribution and logistics.
- Fostering R&D and innovation: The program encourages R&D investment and technological advancements to improve the quality and competitiveness of Indian products.
- Attracting foreign investment: PLI aims to draw foreign investments by offering incentives to international businesses establishing production facilities in India.
Benefits of Production Linked Incentive (PLI):
Manufacturers as well as the Indian economy as a whole can benefit from the Production Linked Incentive (PLI) plan in a number of ways. Some of the PLI program’s major benefits include:
- Boost to domestic manufacturing: PLI encourages increased domestic production, creating more jobs and reducing import reliance.
- Enhanced competitiveness: The scheme promotes technology adoption and R&D, improving the quality and competitiveness of Indian goods for international markets.
- Attracting foreign investments: PLI attracts foreign investments, bringing capital, knowledge, and technology advancements to bolster manufacturing capabilities.
- Job creation: The program generates new employment opportunities across manufacturing, distribution, and logistics sectors, improving livelihoods.
- Reduced import dependence: PLI reduces reliance on imports by incentivizing local production, preserving foreign exchange reserves.
Modified Programme for Semiconductors and Display Manufacturing Ecosystem:
The modified PLI plan focuses on developing India’s semiconductor and display manufacturing ecosystem. It aims to attract multinational companies and support domestic production. With a budget of INR 1970 billion (US$26.48 billion) across 13 sectors, the scheme enhances local supply chain capabilities and encourages high-tech manufacturing investments. By rewarding increased domestic sales, it aims to strengthen the manufacturing sector’s competitiveness, boost GDP contribution, and create job opportunities in India.
The PLI system provides incentives to companies producing electronic components, including semiconductors, display screens, and ATMP units. Incentives are based on additional sales of locally manufactured items over five years, starting from the base year of 2019-20. The scheme supports new investments and R&D in the electronics sector, aiming to reduce import reliance and promote domestic value addition. It generates job opportunities, enhances competitiveness, and attracts foreign investment in electronics manufacturing.
Objectives of Modified Programme for Semiconductors and Display Manufacturing Ecosystem:
Several goals are pursued by the Production Linked Incentive (PLI) programme for the electronics industry, also known as the Modified Plan for the Growth of the Semiconductor and Display Manufacturing Ecosystem. The scheme’s primary goals are:
- Promote domestic manufacturing: PLI encourages domestic production of electronic components, reducing import reliance and developing a national ecosystem for electronics manufacturing.
- Increase exports: The program enhances competitiveness for Indian manufacturers in the global market, incentivizing higher production and quality standards to boost exports of electronic components.
- Create jobs: PLI expands employment opportunities across the value chain, from manufacturing to distribution and logistics, through domestic industry growth and increased exports.
- Attract foreign investments: The scheme attracts foreign capital by improving the business environment and offering incentives to foreign manufacturers establishing production facilities in India.
- Foster R&D: PLI promotes R&D investment and adoption of advanced technology to enhance the quality and competitiveness of Indian electronic components.
The Indian government approved a program with a budget of 76,000 crore (over 10 billion USD) to develop India’s semiconductor and display manufacturing ecosystem. The aim is to promote the Aatmanirbhar Bharat vision and establish India as a global hub for Electronics System Design and Manufacturing. The program includes various initiatives to attract investments to these industries.
FAME-India Scheme (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles):
The FAME India project is a government initiative to promote the use of electric and hybrid vehicles in the country. It offers incentives to manufacturers and buyers, making these vehicles more affordable and accessible. The project has been implemented in phases, with ongoing efforts in 2024. The first phase focused on demand generation, technology platforms, pilot projects, and pricing infrastructure. In June 2021, the second phase was revised based on feedback and experiences, aiming to accelerate the adoption of electric vehicles by reducing upfront costs. The FAME India program aims to promote reliable, cost-effective, and efficient electric and hybrid vehicles. It plays a vital role in promoting sustainable mobility, reducing reliance on fossil fuels, and mitigating vehicle pollution. The program also contributes to the competitiveness of India’s manufacturing sector, GDP growth, and job creation.
Objectives of FAME-India Scheme:
- Reduce vehicular pollution: FAME-India aims to lower pollution by promoting electric vehicles (EVs) with lower emissions and supporting the development of EV charging infrastructure.
- Drive sustainable development: FAME-India supports the government’s sustainable development goals by reducing reliance on fossil fuels and promoting clean energy through the adoption of EVs.
- Boost domestic manufacturing: FAME-India incentivizes domestic production of EVs and components, creating job opportunities and enhancing the competitiveness of the Indian automotive sector.
- Improve transportation efficiency: FAME-India encourages the use of energy-efficient EVs, leading to cost savings, reduced fuel consumption, and lower carbon emissions in the transportation sector.
- Foster innovation: FAME-India provides financial incentives for R&D in the EV industry, driving innovation and enhancing the competitiveness of the Indian EV market.
FAME India program benefits manufacturers and infrastructure providers of electric vehicles. It covers various vehicle types, such as two-wheelers, three-wheelers, four-wheelers, and buses. The program has already supported a large number of xEVs in the first phase. The updated FAME II policy focuses on accelerating EV adoption, particularly for two-wheelers.
Udyami Bharat Scheme:
Udyami Bharat is a government program that aims to strengthen India’s MSMEs (micro, small, and medium-sized enterprises). It introduces various initiatives such as MUDRA Yojana, Emergency Credit Line Guarantee Scheme, and Scheme of Fund for Regeneration of Traditional Industries. The program emphasizes the empowerment of MSMEs and includes new initiatives like RAMP and CBFTE. RAMP aims to expand MSMEs’ policy execution and geographic reach with a budget of Rs. 6,000 crore. Udyami Bharat is expected to boost MSMEs’ growth, contribute to the manufacturing sector, and create job opportunities.
Objectives of Udyami Bharat Scheme:
The Udyami Bharat program aims to strengthen MSMEs in India by improving their state-level coverage and implementation capabilities. It empowers small enterprises, creates jobs, promotes innovation and entrepreneurship, and enhances competitiveness. The program supports the development of MSMEs, contributes to GDP growth, and provides job opportunities. Udyami Bharat plays a crucial role in fostering economic growth, reducing unemployment, and expanding MSMEs in India.
In conclusion, India has introduced various programs to boost the manufacturing industry. Initiatives like the Modified Plan for Semiconductors, FAME-India for electric vehicles, and PLI scheme have benefits such as promoting domestic manufacturing, attracting foreign investment, creating jobs, encouraging innovation, and supporting sustainable development. These programs enhance the competitiveness of Indian manufacturing through technology adoption, R&D support, and financial assistance.
These programs aim to boost economic growth, reduce reliance on imports, and enhance India’s global competitiveness. They reflect the government’s commitment to domestic manufacturing and building a self-reliant India. Their impact on the manufacturing sector is expected to be significant in the future.
FAQ’s:
What is the National Logistics Policy (NLP)?
The National Logistics Policy aims to enhance India’s logistics sector by addressing costs and inefficiencies. It focuses on infrastructure development, digital systems, regulations, and skill development to boost efficiency and attract investments.
What are the objectives of the Production Linked Incentive (PLI) scheme?
The PLI scheme aims to boost domestic manufacturing, enhance export competitiveness, create jobs, foster R&D and innovation, and attract foreign investment in strategic industries.
What is the Modified Programme for Semiconductors and Display Manufacturing Ecosystem under PLI?
The Modified PLI plan focuses on developing India’s semiconductor and display manufacturing ecosystem. It incentivizes companies producing electronic components, aiming to reduce import reliance and attract foreign investment.
What is the FAME-India Scheme?
The FAME-India Scheme promotes the adoption of electric and hybrid vehicles in India through incentives for manufacturers and buyers. It aims to reduce vehicular pollution, drive sustainable development, boost domestic manufacturing, and improve transportation efficiency.
What are the objectives of the FAME-India Scheme?
The objectives of the FAME-India Scheme include reducing pollution, promoting sustainable development, boosting domestic manufacturing, improving transportation efficiency, and fostering innovation in the electric vehicle industry.
What is the Udyami Bharat Scheme?
The Udyami Bharat Scheme is a government program aimed at strengthening micro, small, and medium-sized enterprises (MSMEs) in India through various initiatives, such as financial support, credit guarantees, and regeneration of traditional industries.
What are the objectives of the Udyami Bharat Scheme?
The objectives of the Udyami Bharat Scheme are to empower MSMEs, create job opportunities, promote innovation and entrepreneurship, contribute to GDP growth, and provide a supportive environment for the growth of MSMEs.
How do these initiatives contribute to India’s manufacturing sector?
These initiatives contribute to India’s manufacturing sector by promoting domestic production, attracting foreign investment, creating jobs, fostering innovation, enhancing competitiveness, and improving the overall manufacturing ecosystem and infrastructure.
How can businesses and individuals benefit from these manufacturing initiatives?
Businesses can benefit from incentives, financial support, and a business-friendly environment to expand operations, increase production, access new markets, and enhance competitiveness. Individuals can benefit from job opportunities, improved infrastructure, and the availability of sustainable products.
Are these initiatives aligned with the government’s broader economic goals?
Yes, these initiatives align with the government’s broader economic goals of sustainable development, reducing import reliance, attracting investments, creating employment opportunities, enhancing competitiveness, and driving overall economic growth.
Please note that the answers provided here are a summary of the information presented in the article. For a more comprehensive understanding, we recommend referring to the full article.
Please let me know if you have any more questions!
Thank you for reading!
5 government schemes in part 1 and 5 schemes in part 2 are covered. You can read part 1 by clicking here.
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