NEW DELHI: Indian Prime Minister Narendra Modi’s government has decided to let lapse a $23 billion programme to incentivise domestic manufacturing, just four years after it launched the effort to woo firms away from China, according to four government officials.
The scheme will not be expanded beyond the 14 pilot sectors and production deadlines will not be extended despite requests from some participating firms, two of the officials said. Some 750 companies, including Apple supplier Foxconn and Indian conglomerate Reliance Industries, signed up to the Production-Linked Initiative scheme, public records show.
Firms were promised cash payouts if they met individual production targets and deadlines. The hope was to raise the share of manufacturing in the economy to 25 per cent by 2025.
Instead, many firms that participated in the program failed to kickstart production, while others that met manufacturing targets found India slow to pay out subsidies, according to government documents and correspondence seen by Reuters. As of October 2024, participating firms had produced $151.93 billion worth of goods under the program, or 37pc of the target that Delhi had set, according to an undated analysis of the program compiled by the commerce ministry. India had issued just $1.73 billion in incentives - or under 8pc of the allocated funds, the document said.
News of the government’s decision to not extend the plan and specifics about the lag in payouts are being reported by Reuters for the first time.
Modi’s office and the commerce ministry, which oversees the program, did not respond to requests for comment. Since the plan’s introduction, manufacturing’s share of the economy has decreased from 15.4pc to 14.3pc.
Foxconn, which now employs thousands of contract workers in India, and Reliance didn’t return requests for comment.
Two of the government officials told Reuters the end of the program did not mean Delhi had abandoned its manufacturing ambitions and that alternatives were being planned. The government last year defended the program’s impact, particularly in pharmaceuticals and mobile-phone manufacturing, which have seen explosive growth. Some 94pc of the nearly $620 million in incentives disbursed between April and October 2024 were directed to those two sectors.
In some instances, some food-sector companies that applied for subsidies weren’t issued them due to factors such as “non compliance of investment thresholds” and companies “not achieving stipulated minimum growth,” according to the analysis.
Published in Dawn, March 23rd, 2025
