India’s PLI schemes to boost revenues of 720 companies by US$459 billion over next 5 years: Goldman Sachs

According to a Goldman Sachs report, the central government’s production-linked incentive (PLI) schemes could generate incremental revenues of US$ 459 billion across over 720 companies over the next 5-6 years.

The schemes aim to increase manufacturing capacities, reduce imports, promote exports and generate employment in various sectors. “More than 720 companies could grow revenues of US$459 billion in 5-6 years,” it said.

In the energy transition segment, three projects in advanced chemistry cell (ACC) batteries are set to achieve revenues of US$24.7 billion with incentives of US$2.3 billion, representing 9.2 per cent incentive-to-investment, the report data showed. -Represents the revenue ratio.

The automobile and auto component sector with 95 projects has already achieved incremental sales of US$ 1.3 billion with incentives of US$ 3.2 billion.

Meanwhile, 14 solar photovoltaic (PV) module projects are expected to generate revenues of US$64.6 billion with incentives worth US$3 billion. Additionally, there are 34 projects in the green hydrogen sector with incentives worth US$2.2 billion, and Ashoka Buildcon has announced an investment of US$1.08 billion in the sector.

For import substitution, 32 projects in large-scale electronics manufacturing are estimated to generate revenues of US$ 130.1 billion with incentives of US$ 4.8 billion, giving an incentive-to-revenue ratio of 3.7 per cent.

The IT hardware sector is expected to generate revenues of US$24.8 billion with a boost of US$2.1 billion. The telecommunications and networking products sector has already achieved sales of US$ 8.3 billion, including exports of US$ 1.5 billion, after an investment of US$ 480 million.

Other sectors such as white goods, pharmaceutical intermediates and special steel are also contributing significantly in reducing imports and promoting domestic manufacturing.

The pharmaceutical sector is expected to generate revenues of US$24.9 billion with incentives of US$1.9 billion to increase exports and employment.

The textile sector, supported by incentives of US$1.3 billion, is targeting revenues of US$24.2 billion, while food products are set to generate revenues of US$15 billion with incentives of US$1.4 billion.

In the semiconductor sector, the US$9.5 billion stimulus is expected to generate revenues of US$53.1 billion.

But despite the promising outlook, the report said growth across PLI sectors has been uneven. By August 2024, incremental sales across all regions were US$150 billion, with a significant portion driven by mobile phone manufacturing.

Sectors such as telecom, pharmaceuticals and white goods have shown the most progress, while medical devices, textiles and auto components have lagged behind.

To address these challenges, the government has been active in refining allocations, broadening the scope of PLI and adjusting approval criteria to improve incentive disbursement and enhance local value addition.

The report said that while most of the projects are in the investment phase, production is expected to increase significantly by FY2025, which will lead to greater distribution of incentives in the coming years.