Interim Budget 2024: New PLI push for toys, footwear sectors with token allocations

The interim Budget has made a token allocation for Production-Linked Incentive (PLI) schemes targeting the toy and leather and footwear sectors for the 2024-25 fiscal, contingent upon approval from the Union Cabinet. Overall, the interim Budget has pegged total disbursements from PLI schemes at Rs. 6,200 crore for the next fiscal, representing a 33 per cent increase from the estimated Rs. 4,645 crore allocated this year.

Union Minister for Commerce and Industry Piyush Goyal observed that outlays for these industries are expected to grow significantly in the coming years. He noted that every industry requires a gestation period and explained that while schemes for sectors like electronics have already come into operation due to shorter lead times, sectors such as textiles, auto components, and steel have longer requirements. Goyal stated that as these projects commence operations, the outlay will expand, adding that the government would provide additional funds through supplementary grants if the current estimates are exhausted.

The proposed extension of the scheme to the leather and footwear sector is envisaged with a total outlay of Rs. 2,600 crore, while the allocation for the toy sector has been fixed at Rs. 3,489 crore. Addressing the timeline for a formal announcement, the Minister declined to preempt the Cabinet's decision, noting that such matters are determined by the Cabinet led by the Prime Minister.

Budget documents indicate that the proposed PLI scheme for leather and footwear is intended to run from 2023-24 to 2031-32. The documents clarify that yearly incentive outgoings depend on several variables and that benefits availed by manufacturers under the existing Indian Footwear, Leather and Accessories Development Programme (IFLDP) would be adjusted when calculating incentives under the new scheme. As the Cabinet is yet to grant its formal approval, only a token provision has been made for the 2024-25 fiscal.

Similarly, the PLI scheme for toys is recommended with an outlay of Rs. 3,489 crore spanning from 2024-25 to 2031-32. The guidelines specify that any entity already availing benefits under other government PLI schemes for the same product will be ineligible. While the government had originally anticipated PLI disbursements to reach Rs. 11,000 crore in the current fiscal, the revised estimates reflect a more gradual ramp-up as various sectors move past their initial gestation phases.