PLI schemes not needed for leather shoes, handicrafts: India's GTRI

24 May '23

1 min read

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Global Trade Research Initiative founder Ajay Srivastava has urged the Indian government not to introduce new production-linked incentive schemes for sectors like leather shoes and handicrafts.
These sectors consist of small firms that need access to technology and low-cost finance, while the scheme's focus is on scale of production, benefiting large firms.

Global Trade Research Initiative (GTRI) founder Ajay Srivastava recently suggested that the Indian government should not introduce new production-linked incentive (PLI) schemes for sectors like leather shoes and handicrafts—which consist primarily of small firms—as the focus of the scheme is on scale of production, which benefits large firms.

PLI schemes may shift business away from small enterprises, creating stress in the small sector, he noted.

Instead of schemes like PLI, small firms require support like access to technology and low-cost finance through separate initiatives, Srivastava said.

There have been demands for rolling out PLI schemes for products like toys, furniture and leather over the last few months.

The government should not introduce PLI for products with many manufacturers, large or small, as it leads to ‘competitive distortion’ by giving money to a few firms, he said.

“PLI money at 4-6 per cent of incremental sales could increase profit margins by 30-40 per cent, giving a considerable price advantage over others. Non-PLI recipients suffer for no fault. The PLI should avoid incentivising such sectors. It should focus only on cutting-edge product groups where India has no manufacturing capabilities,” he was quoted as saying by Indian media reports.

ALCHEMPro News Desk (DS)

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