Indy concerned, continued delays in payment to companies in the PLI schemes

A high-level government committee has raised concern over continued delays in payment to companies in the production-linked incentive (PLI) schemes, Business Standard has learnt.

The committee has called for “corrective steps” across departments for smooth implementation of the Centre’s flagship scheme to boost domestic manufacturing. The government had allocated Rs 1.97 trillion for 14 PLI schemes three years ago in sectors as diverse as mobiles, drones, solar, telecom, textile, and automobiles. As of December 2023, investment worth Rs 1.06 trillion has been made and nearly 500,000 jobs created, according to government data.

The committee, tasked with reviewing PLI schemes, is chaired by the Cabinet secretary with representations from the Department for Promotion of Industry and Internal Trade (DPIIT), NITI Aayog, the Department of Economic Affairs, and the Department of Financial Services.

The DPIIT has been entrusted with providing the status of all PLI schemes to the committee.

The committee has now tasked the DPIIT to push all nodal agencies responsible for implementing the schemes, as well as ministries and government departments, to streamline the workflow of disbursement and handhold companies to file correct claims, according to the minutes of the March 2024 meeting, reviewed by Business Standard.

The committee has asked all nodal departments to remain cautious and ensure that “there should be a qualitative improvement in the scrutiny of the incentive claims so that wrong claims are not allowed”, said an official.

The Department of Financial Services is monitoring the project management agencies (PMAs) and ensuring the fast settlement of claims.

This paper recently reported the government was considering an overhaul in sectors such as textiles and pharma, and making incentive payments quarterly. The development comes months after the Cabinet secretary asked the government’s think tank NITI Aayog to review the functioning of the PMAs involved in the schemes due to considerable delays in processing incentive claims. The DPIIT and the finance ministry did not respond to a query sent by Business Standard.

During 2023-24, disbursement fell short of the government’s estimate of Rs 11,000 crore. By the end of March, Rs 6,800 crore was disbursed, after continuously monitoring the PMAs and flagging delays.

It is also learnt that during this meeting, the Chair expressed “displeasure” over the delay in taking on board dedicated domain experts for PLI sectors and creating standard operating procedures (SOPs) for the initiative.

Last year, the PMAs and nodal ministries were asked to create an SOP to reduce the time for processing the documents by June 2024.

The PLI scheme is managed by five PMAs — Industrial Finance Corporation of India, Small Industries Development Bank of India, Metallurgical and Engineering Consultants Ltd, Indian Renewable Energy Development Agency, and Solar Energy Corporation of India.

These PMAs are responsible for supporting relevant ministries in the scheme’s implementation, scrutinising applications, determining eligibility for incentives, and site visits of manufacturing units.

Several sectors have appealed to the government to consider an advance payment of incentive under the PLI to help them spur their manufacturing plans, according to sources.

“The new players, or the smaller ones, especially, want some of the incentive upfront. This can be offset later when the facility comes up. This would be quite encouraging for non-legacy players,” said a PLI winner. Business Standard