Budget 2024: Government Prioritizes Make in India for Manufacturing Boost
To stimulate the manufacturing sector and boost employment opportunities, the government is considering expanding the reach of the Production-Linked Incentive (PLI) scheme in the upcoming interim budget for 2023–24. Finance Minister Nirmala Sitharaman is set to present the budget on February 1. The government aims to incorporate industries such as garments, jewellery, and handicrafts into the PLI scheme, which was initially introduced in 2021 and currently covers 14 sectors.
Anticipated government initiatives are poised to enhance sustainable income growth in rural households, consequently bolstering disposable income in the rural economy. Nidhi Aggarwal, the founder of SpaceMantra, suggests that the Production-Linked Incentive (PLI) schemes have been instrumental in creating employment opportunities, and this trend is expected to persist. "The focus will likely remain on Make in India's momentum. GST rationalization, easier credit flows, and capex incentives will be in the focus when FM Nirmala Sitharaman tables the budget", she said.
The budget will double down on infrastructure momentum to enable efficient logistics for Make in India. The upcoming budget is expected to allocate a substantial amount for capital expenditure, as it has a multiplier effect on the economy. Zameer Malik, CEO of Kulsum's Kaya Kalp, said that the government is expected to continue prioritizing capital expenditure, particularly in the infrastructure sector, to drive economic growth. "While export incentives remain pending, continued plugging of gaps in roads, rails, and regulations will organically foster wider manufacturing competitiveness. Tax stability also encourages production planning cycles even as consumption receives bottom-up boosts," Malik said.
Significantly, the government earmarked an unprecedented Rs 10 lakh crore for capital expenditure in the ongoing fiscal year. According to the report, the allocation has steadily risen, reaching Rs 4.39 lakh crore in 2020–21, Rs 5.54 lakh crore in the subsequent year (2021–22), and Rs 7.5 lakh crore in 2022–23. Gurmit Singh Arora, the president of the Indian Plumbing Association, noted that the budget provides continued support for domestic consumption through income assistance but overlooks incentives for export promotion. "The growing local demand forms reliable insulation even as global headwinds persist. While big policy catalysts would have provided adrenaline shots, the incremental spirit keeps sufficient manufacturing momentum amid cyclical risks", he said.
Over the recent years, India, led by the Modi government, has emerged as a focal point for manufacturing, drawing considerable attention. The government's pivotal role in fostering a business-friendly atmosphere has been instrumental in attracting substantial private investments. The expanding economy has witnessed a noteworthy surge in private investment across diverse sectors.
