PLI push: The government can relax government procurement rules for new, innovative products

The government is considering the possibility of liberalizing government procurement rules for new and innovative products produced under the Production Linked Incentive (PLI) scheme to attract more investments in the fourteen identified sectors, said Commerce and Industry Minister Piyush Goyal .

All quality approvals, from agencies such as BIS, FSSAI, CDSO and NABL, for items produced under the PLI scheme will also be expedited from now on, the minister said on Sunday after consulting with PLI beneficiaries. “We (DPIIT) will work with all line ministries to see how we can ensure that when you (PLI beneficiaries) have to supply to government procurement, the prior experience conditions can be liberalized… all your Class 1, The Class 2 categorization can be liberalized, allowing you to produce new and innovative products along your journey. We are working in this direction to give you greater market access in the area of ​​government procurement,” Goyal said.

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A list of issues that could fall under the liberalized public procurement rules will also be discussed with line ministries. The minister said he was optimistic the scheme’s investment targets would be exceeded. “We expected this ecosystem to have an investment of ₹1,32,000 crore. But with today’s discussion where many beneficiaries have spoken about exceeding investment commitments, I personally expect that with the encouragement of this government, we will get investments of over ₹2 lakh crore,” he said.

Investments in the semiconductor sector itself could exceed ₹2 lakh crore, beyond the 14 sectors.

To exceed the goal

The jobs generated under PLI are also likely to exceed the target, Goyal added. “When we originally conceptualized PLI, we expected that approximately 8.5 million jobs would be created from these investments. But listening to the stories coming through from various PMAs (Project Management Agencies), line ministries and my own detailed engagements with industry, it seems that we could end up with direct employment of over 12 lakh people and indirectly possibly many more more.” he said.

The PLI scheme was announced in 2021 for 13 sectors (later expanded to one more) with an outlay of ₹1.97 lakh crore, to boost local manufacturing in strategic areas and encourage exports. The support under the scheme, based on minimum investments and turnover, is provided over a period of five years.

The 14 sectors include mobile manufacturing and specified electronic components; drug and API intermediaries; medical devices; cars and parts; pharmaceutical products, special steel, telecom products; electronic/technological products; white goods, food products, textiles (MMF segment and technical textiles), high-efficiency solar PV modules, ACC battery and drones and components.

Goyal said the timeline for certain sectors covered under the scheme could be extended based on the submissions from line ministries and approvals received. So far, the plan has proven successful in a handful of sectors, especially mobile manufacturing, and to some extent in industries such as electronics, food processing, drones and pharmaceuticals.

As per latest estimates, the PLI scheme has attracted ₹1.5 lakh crore investments (total investment expectation is ₹3-4 lakh crore), leading to production worth ₹8-9 lakh crore, of which ₹3 -3.5 lakh crore was exported, the official said. The total stimulus disbursement was ₹10,000 crore but was concentrated in certain sectors.