While the Production-Linked Incentive (PLI) Scheme will continue to lead the charge, India is also targeting a shift towards sustainable, high-tech and value-driven industrial practices. The end-goal — position India among the top few in the international arena, and be (as well as be seen as) a nation pursuing global best climate-conscious practices.

“This strategic push will act as the third engine of India’s growth, alongside services and agriculture, fostering investment, innovation and self-reliance in crucial sectors,” Sitharaman said.

The over-arching objective is to use clean technologies to kickstart sustainable industrial growth, riding on the PLI Scheme that was unveiled in March 2020 to push domestic manufacturing and reduce import dependency. The scheme covers critical sectors and provides financial incentives to foster incremental production, encouraging companies to expand, invest in advanced tech and create jobs.

While the fine-print on extended post-Budget PLI benefits are awaited, what’s clear is the commitment to renewable energy and clean manufacturing. The government is keen to position India as a global manufacturing hub for solar PV cells, electric vehicle (EV) batteries, motors and controllers, wind turbines and advanced energy storage solutions.

National Manufacturing Mission To Boost MSMEs

The FM also outlined plans to push the ‘Make in India’ scheme by setting up a National Manufacturing Mission to support clean tech manufacturing and attract investments across sectors, aiming to enhance outputs and self-reliance.

“The National Manufacturing Mission will boost India’s atmanirbharta (self-reliance). It will encompass small, medium and large industries, providing policy support, execution roadmaps and a monitoring framework,” she said.

Also announced was a move to simplify and streamline the customs tariff structure, addressing duty inversion while also promoting domestic manufacturing, value addition and exports. This rationalisation is part of a larger review of the customs rate structure announced in the July 2024 Budget.

The 2025 Budget marked a concerted step by extending the PLI scheme to include toys and footwear, bringing the total sectors covered to 16. The allocation was increased by 89 per cent to Rs 16,092 crore for FY24-25, up from Rs 8,520 crore in FY23-24.

A substantial 38 per cent of the allocation was focused on incentivising large-scale electronics manufacturing, reflecting the government’s emphasis on attracting investments and advancing domestic production.

Economic Survey Sent Up Warning Balloons

That India’s manufacturing sector needed propping up, became clear on Friday itself, when the FM tabled the Economic Survey. Within the larger narrative of rising agricultural output, industrial growth, uptrend in services and increase in capital expenditure, lay a subdued note on manufacturing. And while the sector tailgated other fancier and gate-crashing counterparts, it still shouted out loud.

The Economic Survey said export growth and manufacturing would continue to face challenges due to global uncertainties. “The slowdown in global output, especially in Europe and parts of Asia, including China, is due to supply chain disruptions and weak demand,” the Survey said.

It added that this was a time for India to reduce dependence on overseas suppliers and purchasers, focusing instead on domestic raw material sources and markets.

The sentiment was cemented by Chief Economic Advisor V Anantha Nageswaran, who highlighted a need to keep close tabs on global cues and developments. The CEA also made a blunt comparison with China, qualifying its dominance in the manufacturing space: “Not since World War II has (any) one country dominated the manufacturing landscape in such a way.”

Nageswaran’s next statement was more telling: “China is the world’s sole manufacturing superpower, its share in critical technology higher than the combined next 10 countries.”

The silver lining is that the global manufacturing pie is getting bigger and India has a 2.8-per cent share in this, against China’s 28.8 per cent. India’s numbers are smaller, but this is still a not a ‘ship has sailed’ scenario.

PLI Scheme Could Provide Determining Boost

The country’s industrial growth in fiscal 2025 is expected to be higher than the previous five-year average. It is estimated to grow by 6.2 per cent in 2024-25, driven by robust growth in electricity and construction.

Admittedly, overall growth has declined to 3.6 per cent in the September quarter — and that is something to work on. It also gives scope to improve the contribution of the industrial sector in gross domestic product (GDP) in relation to its counterpart countries.

This is where the PLI Scheme could prove to be the game-changer. Launched in March 2020, the scheme has completed nearly five years. In December 2024, the Lok Sabha was informed that the key sectors covered by PLI have been offered an outlay of Rs 1.97 lakh crore to enhance capabilities and boost exports.

There are hiccups. A glaring one is delayed payouts of cash benefits to applicant companies, even those which have met targeted output objectives and provided employment (totalling over 150,000 people).

The authorities have been ironing out this chink, accepting requests for release of incentives on a quarterly basis, compared to the earlier norm of annual payouts.

Manufacturing, PLI: Many Remain Sceptical

Many in industry and on the ground, though, remain sceptical of India’s manufacturing outlook and the PLI Scheme itself, questioning the fuss over this when more burning issues remain unresolved.

“It is prejudicial to see people ask for a consumption stimulus without inflation reaching the targeted 4 per cent. India faces the challenge of lowering deficits and widening the tax net, and we are arguing about deductions and sops,” says Rishab Rao, a scriptwriter in Mumbai.

“Real inflation is near 10 per cent and joblessness has breached 45 per cent. If at all there has to be a stimulus, it should go towards agriculture output and storage, rather than consumption. Climate change is also causing nightmares, including with farm production, catalysing high food inflation,” says Shikha Verma, senior manager with Dabur India.

There are divergent views on the PLI Scheme, keeping the Finance Minister’s plate full. After her second Budget announcement in the Modi 3.0 government, she faces a rough balancing rope-walk.

She has to walk deftly in a war-zone riddled with inflation, unemployment, global military standoffs and domestic upheaval. Yet, on this walk, she is expected to shore up the rupee, rein in prices and yank up industrial output. It is a tall order, but the need of the hour.

(The writer is a veteran journalist and communications specialist. Views are personal)