Manufacturing sops in green energy, pharma and battery sectors to boost capital expenditure : Report

Representational Image (Image: Shutterstock)

Representational Image (Image: Shutterstock)

Manufacturing sector capital expenditure is on course for a leg-up with overwhelming responses to the government’s production-linked incentives schemes, especially for lithium-ion battery, pharma and solar module segments, a report said on Wednesday. So far the PLI (Production-Linked Incentive) scheme has received robust response in green initiative spaces such as renewable energy as well as ACC (Advanced Chemistry Cell) battery manufacturing, notes Icra Ratings in its report.

This shows that the scheme is on track to revive the manufacturing capex (capital expenditure), the report said. The government has extended the scheme for a second round on the back of encouraging response in a few sectors. Also, it has increased or is planning to increase the outlay for some sectors.

In the renewables space, the government raised the outlay for solar PV modules to Rs 24,000 crore in the FY23 budget after witnessing an encouraging response in the first round of the scheme with an initial outlay of Rs 4,500 crore. According to Rohit Ahuja, head of research and outreach at Icra, the success of the scheme indicates that the government is on track to enhance manufacturing capex. There is a high probability of the outlay for certain sectors, especially in green initiative space, being expanded.

However in the wake of rising input costs and the anti-inflationary measures, execution delays in certain sectors can be a concern, he warns. As per the wait list from the first round of bidding, it seems the entire Rs 24,000 crore PLI outlay would be well covered. As per the wait list from the first round of bidding, it seems the entire Rs 24,000 crore PLI outlay would be well covered.

A similar response was visible in the ACC batteries PLI scheme, where the applications were received for 110 gw against 50 gw envisaged, the report said, adding that the government may look at increasing the outlay for this sector too. The PLI scheme for semiconductors has received applications for 80 per cent of the total outlay of Rs 76,000 crore in the first round, despite an aggressive timeline for application submissions, it said.

Several other sectors such as pharma, automobile and food products have also received positive responses. Sunrise sectors like drone manufacturing have also received encouraging responses and attracted enough applications over the 20 days period, the report added.