Do not introduce PLI for small firm-dominated products: GTRI to Govt

The government should not extend fiscal support under the production-linked incentive scheme (PLI) to small firm-dominated products like leather shoes and handicraft as the move may shift business away from those enterprises, think tank GTRI said in a report

The government should not extend fiscal support under the production-linked incentive scheme (PLI) to small firm-dominated products like leather shoes and handicraft as the move may shift business away from those enterprises, think tank GTRI said in a report on May 22.

Global Trade Research Initiative (GTRI) said small firms need assistance like access to technology and low-cost finance and not PLI.

It also said PLI for industries like food processing or auto, where many domestic manufacturers make similar products, introduces competitive distortion by giving money to a few firms.

"PLI money at the rate 4-6 per cent of incremental sales could increase profit margins by 30-40 per cent, giving a considerable price advantage over others," GTRI co-founder Ajay Srivastava said.

He said non-PLI recipients suffer for no fault and the scheme should avoid incentivizing such sectors.

It should focus only on cutting-edge product groups where India has no manufacturing capabilities, he added.

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