While PLI gains prominence, the new industrial policy is now on the sidelines.

The industrial policy, expected to be released this year, will be the third such framework in the history of independent India, replacing the historic policy of 1991.

Key Highlights -

• Policy Shift: The government places emphasis on the Production-Linked Incentive (PLI) scheme over the new industrial policy.

• Industrial Policy Delay: The anticipated industrial policy, designed to be the third framework in independent India, now faces postponement. The PLI scheme becomes the primary driver for manufacturing and private investments.
• Economic Landscape: While the PLI incentivizes manufacturing, concerns arise about its adequacy amid geopolitical shifts and challenges such as high logistics costs and infrastructural bottlenecks.
• Manufacturing Boost: Government sources suggest significant manufacturing improvement through a combination of Free Trade Agreements (FTA) and the PLI scheme.
• Policy Discussion: The draft industrial policy, 'Industrial Policy 2022—Make in India for the World,' proposed bold measures, including a specialized Development Finance Institution (DFI) and a technology fund.
• PLI Dominance: Former chief statistician PronabSen emphasizes that PLI is a partial solution, subsidizing sectors to compensate for disadvantages. However, India needs to offer more to become an alternative to China.
• PLI Schemes: The government has announced PLI schemes for 14 sectors, with incentives exceeding Rs 1.90 lakh crore, accounting for a significant portion of annual investment spending in key industrial sectors.
• Manufacturing Targets: The National Manufacturing Policy aimed for a 25% share of manufacturing in GDP and 100 million jobs by 2022. Current manufacturing's share is around 17%, and the PLI scheme is crucial for achieving these goals.

Need for a new industrial policy in India

The need for a new industrial policy in India arises from several factors that impact the country's economic landscape.

• Changing Economic Dynamics: With the evolving global economic scenario and emerging challenges, India needs a policy framework that aligns with contemporary needs and fosters economic growth.
• Technological Advancements: Rapid technological changes demand policies that encourage innovation, research, and development, ensuring that Indian industries stay competitive on a global scale.
• Global Trade Dynamics: Shifts in global trade patterns, especially considering the rise of protectionist measures in some regions, necessitate a strategic industrial policy to enhance India's competitiveness in international markets.
• Enhancing Ease of Doing Business: To attract investments and promote entrepreneurship, there is a need to streamline bureaucratic processes, reduce red tape, and create a business-friendly environment.

• Boosting Manufacturing: A focused industrial policy can drive the 'Make in India' initiative, encouraging domestic manufacturing, creating jobs, and reducing dependency on imports.
• Addressing Sectoral Challenges: Different sectors face unique challenges. A comprehensive industrial policy can tailor solutions for each sector, considering their specific needs and potential contributions to the economy.
• Sustainable Development: Integrating principles of sustainability and environmental responsibility into the industrial policy can ensure that economic growth is in harmony with ecological considerations.
• Promoting Inclusive Growth: A well-crafted industrial policy should address regional disparities, promote inclusivity, and create opportunities for diverse sections of society, contributing to balanced economic development.
• Global Supply Chain Integration: Given the increasing integration of global supply chains, an industrial policy should position India as an attractive destination for international businesses, fostering trade and economic partnerships.

• Crisis Preparedness: The policy should have provisions to address economic crises effectively, providing a resilient framework that can navigate uncertainties and challenges.