Exclusives

Government source says may not up output-linked fund despite sop expansion

Informist, Wednesday, May 24, 2023

By Krity Ambey

NEW DELHI – The government is unlikely to raise the total outlay for production-linked incentive schemes despite increasing the number of sectors under the scheme as it expects savings on existing allocations, a government official said.

The government in 2021-22 (Apr-Mar) allocated 1.97 trln rupees for production-linked incentive schemes for five years to 13 sectors. Later, the government added drone manufacturing under the scheme and one more scheme for information technology hardware.

Out of the 1.97 trln rupees, the government has already allocated 1.85 trln rupees to 14 sectors, namely, large scale electronics, IT hardware, bulk drugs, medical devices, pharmaceutical drugs, telecom products, food products, automobiles, solar module, speciality steel, white goods, advanced chemistry cells, textiles and drones.

Earlier this month, the Cabinet approved the second production-linked incentive scheme worth 170 bln rupees for IT hardware sector.

However, the total outlay will remain at 1.97 trln rupees as disbursements for some sectors under the schemes may not be as much as the allocations made to them, the official told Informist.

The government had announced the first output-linked incentive worth 73.5 bln rupees for the IT hardware sector in March 2021. In two years, the government received disbursement claims worth 706 mln rupees, out of which only 53 mln rupees has been released, as per the Department of Promotion of Industry and Internal Trade.

There are several other output-linked incentive schemes in the pipeline, but the government will look to accommodate them as well within the 1.97-trln-rupee ceiling, the official said. The government is considering another output-linked incentive scheme for the textile sector and the steel sector.

Data provided by the Department of Promotion of Industry and Internal Trade shows that only eight out of 14 sectors have claimed disbursements under the output-linked incentive schemes so far.

Till Mar 31, the government had released a total of 28.7 bln rupees to eight sectors, against 34.20 bln rupees claimed.

The government expects the IT hardware sector production to pick up in coming years, which is why it has announced a new output linked incentive, the official said.

Below is a table detailing sector-wise allocation as well as incentive claim and fund disbursed (in rupees) till Mar 31 under output linked incentive schemes.

(Source: Department of Promotion of Industry and Internal Trade)

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