2023-08-03 13:36:51
“Investment commitments in auto has overshot government expectation while on the other hand, investment commitments have underwhelmed government’s vision for ACC, textile, and mobile electronics,” SBI MF economists stated, pointing out that Rs 2.9 lakh crore of investment commitments had been received once morest the perceived capex target of Rs 5 lakh crore.
Even though the amount accounts for 8% of the annual capex of corporates and 3.6% of the gross fixed capital formation in the country, the researchers noted that investment might lead to positive externalities–attracting more investors in other sectors.
“In the near-term, expansion of the manufacturing capacity might drive the import bills and trade deficit higher. In the long run, it might be instrumental in increasing manufacturing activity and sustainably reducing the current account deficit in India a few years down the line,” the note stated.
However, the researchers pointed out that the scheme has had a limited impact in attracting global manufacturing players. “Domestic listed and unlisted companies add to 24% and 70% of PLI participants, respectively,” they noted.
They also pointed to certain areas for improvement in designing some PLI benefits. “Product choices might have been more comprehensive or exhaustive for speciality steel, KSM/API (key starting material/active pharmaceutical ingredient) and telecom instruments,”While the SBI MF researchers said that continuation of the scheme might have a “significant impact on Indian macro, export, and overall current account dynamics five to ten years down the line,” they also noted that competition from other nations and a regime change with new policies might act as challenges to the scheme.
1691182535
#SBI #Mutual #Fund #PLI #track #investment #commitments #capex #target #SBI #research
