India recently concluded a successful G-20 summit, showcasing its diplomatic prowess. As the world’s largest democracy, India has the opportunity to play a critical role in global governance and the world economic order. Despite being the fastest growing major economy, India’s manufacturing sector only accounts for 17 percent of its GDP and 2.8 percent of global manufacturing. To stimulate manufacturing growth and attract foreign businesses, the Indian government has implemented reforms focusing on ease of doing business, improving logistics efficiency, promoting sustainable practices, and providing incentives for investment through schemes like the Production Linked Incentive (PLI). The PLI scheme aims to make the Indian manufacturing industry competitive and has expanded to cover 14 sectors with an incentive outlay of over 1.9 trillion Indian rupees ($23 billion). The scheme is expected to attract significant investment and generate millions of jobs. The PLI scheme has already achieved success in the mobile manufacturing industry, with a high percentage of smartphones now being made in India. Additionally, the government is prioritizing new age, green, and sustainable manufacturing sectors for future market potential. The PLI scheme is expected to provide a foundation for the Indian manufacturing sector, but it is not a cure for all of India’s manufacturing challenges, which will take time to overcome. Timely approvals and clearances from different ministries and state governments are crucial for the success of the scheme, and flexibility may be needed in certain sectors to account for production delays caused by external factors. Overall, the PLI scheme is an initial fillip for driving investment in the short term.
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