The union government's expansion of the production-linked incentive (PLI) scheme aims to boost local manufacturing.
An analysis of the scheme across nine major sectors reveals that Gujarat, Karnataka, and Tamil Nadu will be the primary beneficiaries.
According to a research report from CRISIL Market Intelligence and Analysis (MI&A), the PLI scheme is expected to attract investments worth Rs 1.28 lakh crore in nine major sectors.
Tamil Nadu is projected to receive over Rs 42,000 crore, accounting for a third of the total investments.
Gujarat is expected to secure approximately Rs 36,000 crore, representing 28 per cent of the investments.
Karnataka, which has already attracted investments from global electronics manufacturers, is expected to receive Rs 14,000 crore, or 11 per cent of the total.
The remaining Indian states, a total of 25, will collectively receive Rs 36,000 crore, accounting for 28 per cent of the investments in these nine sectors.
The ACC Battery sector is expected to attract investments worth Rs 52,000 crore, making it the largest sector in terms of investment potential.
Tamil Nadu is projected to receive a significant portion of this investment, with 67 per cent of the total capex, amounting to around Rs 35,000 crore. Karnataka and Gujarat are also expected to receive 17 per cent each, equivalent to Rs 9,000 crore.
In the solar photo-voltaic sector, which is anticipated to attract a total capex of Rs 32,000 crore, Gujarat has emerged as the front-runner, securing 76 per cent of the investments, totaling over Rs 24,000 crore. The remaining 24 per cent is expected to go to Andhra Pradesh.
Other key sectoral PLIs, such as textile and mobile handsets, are likely to benefit states like Tamil Nadu, Gujarat, Madhya Pradesh, Maharashtra, and Uttar Pradesh.
According to Hetal Gandhi, Director of Research at CRISIL MI&A, the PLI scheme has shown results in certain sectors like mobile handsets and pharmaceuticals, despite a slow start.
Gandhi explains that the PLI scheme was introduced in 2020-21 and was expected to peak and achieve its purpose by 2025-26.
However, many large ticket industries have yet to adopt the scheme or engage in major activities under it. As a result, the PLI scheme is falling behind its targets.
It is now estimated that the peak incentive payout will occur in 2026-27, and the PLI scheme will continue at least until 2028-29.
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