Among the various sectors that are yet to receive the benefits under the PLI scheme, semiconductors and ACC batteries form around 70 per cent of the major pending capex deployment.
The central government’s PLI schemes are set to bear fruit as the deployment of capital expenditure through these schemes is expected to surge in FY2024. According to experts at ICRA, the next financial year will be the inflection point when the manufacturing capex will surge to Rs 1 lakh crore and stay buoyant over the next two years. The capex is expected to peak at Rs 1.7 lakh crore in FY26. Seeing the trends in the recent developments for large-scale projects, a large chunk of this capex will be dedicated to semiconductors and ACC batteries.
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India’s PLI schemes have already started showing results, especially in the electronics sector which started production in FY22. According to the export data, electronic goods such as mobile phones and IT hardware showed a robust growth in FY22 and in H1FY23. Roughly 80 per cent investments in various other sectors are yet to be initiated. Experts at ICRA believe that the deployment will pick up pace in FY24. Rohit Ahuja, head of research and outreach, ICRA, said, “Based on our calculations, the annual capex from the PLI schemes are expected to cross Rs 1 trillion from FY24 and may peak out at Rs 1.7 trillion in FY26. Hence, FY24 could be an inflexion point for a surge in India’s manufacturing capex.”
Among the various sectors that are yet to receive the benefits under the PLI scheme, semiconductors and ACC batteries form around 70 per cent of the major pending capex deployment. Fiscal support from the government for the production of semiconductors amounts to Rs 60,000 crores, according to ICRA’s report. As a result , the semiconductor and electronics sector is expected to grow at a CAGR (Compound Annual Growth Rate) of 30-35 per cent over a span of five years. A notable boost in the growth of this sector comes from the United States limiting exports of semiconductors and chip-making equipment to China.
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The deployment of a major chunk of capex comes right before the general elections that are scheduled to be held in 2024. Furthermore, ICRA experts believe that further delay may deteriorate conditions. especially amid such a volatile global environment. “In the wake of rising input costs, and unfavourable economic conditions, execution delays in certain sectors could be a concern,” Ahuja said.
https://www.financialexpress.com/economy/indias-pli-linked-capex-to-jump-to-rs-1-lakh-cr-in-fy24-semiconductors-batteries-front-runners-of-rally/2887638/
