Steel, auto, textile companies at heart of PLI scheme job target

The government's ambitious target of generating over 6 million jobs in five years from PLI scheme will hinge on five of the 14 specified sectors reaching the magic numbers

The government’s ambitious target of generating over 6 million jobs in five years from the production-linked incentive (PLI) scheme will hinge on five of the 14 specified sectors reaching the magic numbers.

The five sectors are textiles, speciality steels, white goods such as ACs and LED TVs, autos and auto components and high-tech mobile device manufacturing.

Based on the commitments made by the companies (on which the government has based its targets), these five sectors will account for  53 per cent of the jobs that need to be generated through direct and indirect employment.

More importantly, mobile device manufacturing alone, with 200,000 direct jobs and 600,000 indirect jobs, will account for over 13 per cent of all the jobs generated from PLI, the highest of all the sectors.

What is even more interesting is that the three vendors of just one company, Apple, will constitute 8 per cent of the government’s overall PLI job target, based on their promises.

The three vendors, Foxconn, Wistron and Pegatron, have made a commitment to generate 60 per cent of the 200,000 direct jobs. Analysts assume that they will also account for a similar percentage of indirect jobs.      

Spliced another way, a fourth of the jobs will come from just two sectors: textiles and autos and auto components. These are expected to generate 150,000 jobs collectively.

The incremental job generation has to be seen in the context of how manufacturing jobs have vanished. The CMIE data points out that from employing 51 million Indians in 2016-17, the manufacturing sector employed only 27.3 million in 2020-21, predating the pandemic.

For eligible PLI companies, the commitment to generate employment is not a condition for earning their financial incentives each year. If they fail, the incentives are not withdrawn. The incentive scheme (4 to 6 per cent of production value in most cases) is pegged to incremental investment and incremental production value for each year.

The government is keeping a very close eye on the commitments.  At least in the mobile device space, one of the first big PLI schemes to take off, the jobs target given by companies seems to be on track.

According to estimates by the Indian Cellular and Electronics Association, it is expected that mobile device manufacturing will generate additional jobs of over 100,000 by the end of this calendar year — half the target by the second year.

Analysts sound a word of caution over the targets. They cite an April 2021 press statement announcing the approval of the PLI scheme for white goods (ACs and LED TVs) and saying it will generate 400,000 jobs in five years.

But seven months later, in another press release announcing the number of players who had applied for the scheme, direct employment was pegged at only 44,000, which meant that indirect employment would have to be nine times more if the earlier target was to be achieved.