PLI in the works for heavy equipment

PLI in the works for heavy equipment

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  • September 17, 2023
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NEW DELHI : The Union government is working on a production-linked incentive (PLI) scheme worth 12,000 crore for heavy machinery used in mining and construction, two people aware of the development said.

The heavy industries ministry is currently seeking industry inputs on product coverage, implementation and quantum of incentives, the people said on condition of anonymity. The scheme size may vary between 8,000 crore and 12,000 crore, but discussion on this is yet to conclude.

The PLI scheme will aim to attract investment in manufacturing large-sized machines used in mining coal and other minerals, as well as construction. It would also incentivize the production of components required by the sector, a big chunk of which is imported for local manufacture even now.

Once the draft is finalized, the heavy industries ministry will seek approval from the commerce and finance ministries over the next couple of months, the people said. It aims to operationalize the scheme either this fiscal year or early next fiscal year after securing cabinet clearance, with incentives flowing from 2025-26 till the end of 2029-30.

Under its ‘Atmanirbhar Bharat’ and ‘Make in India’ initiatives, the government launched several PLI schemes beginning in April 2020 to make Indian manufacturers globally competitive, attract investments, enhance exports, reduce dependence on imports and generate employment. The schemes give firms incentives for incremental sales from products manufactured in domestic units.

The PLI scheme for heavy equipment is expected to help sustain the country’s momentum in infrastructure growth.

Equipment targeted under the scheme include backhoe loaders, excavators, super loaders, blast-hole drills, bucket-wheel excavators, dozers, highway miners and large mining trucks. Some of these are manufactured in India in small numbers, but the requirement is rising.

The government wants the scheme to enhance capacity in equipment already being manufactured and create new capacities in other equipment imported as completely built units (CBUs) or assembled locally with a large import content. The scheme’s focus would also be on developing an ecosystem involving small and medium enterprises to manufacture various grades of components required for the sector.

Further, with the government’s focus on boosting underground coal mining, specific equipment for the segment may also be brought under the ambit of the planned scheme.

Queries sent to the ministries of heavy industries and coal, and NITI Aayog remained unanswered till press time.

“The industry is fully committed to not only building the capacity and capability for Make in India for India but also for Make in India for the world to realize the vision of Aatmanirbhar Bharat,” said V. Vivekanand, president of the Indian Construction Equipment Manufacturers’ Association (ICEMA) and managing director of Caterpillar India Pvt. Ltd.

According to industry estimates presented to the government earlier this year, the PLI scheme for the construction equipment industry will bring $4 billion worth of domestic and foreign investments in the near term and facilitate $2.9 billion worth of forex savings by 2030 through import substitution. It would also facilitate $3 billion of exports by 2030 and 3.2 million of additional employment.

According to ICEMA Industry Vision Plan 2030, the market size for construction equipment is set to grow to $25 billion by the end of the decade. ICEMA has asked the government to consider extending a PLI scheme to the sector, given the industry’s capital-intensive nature and to help it contribute effectively towards the country’s infrastructure development.

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Updated: 17 Sep 2023, 11:45 PM IST

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