Expanding PLI Scheme Beyond 14 Sectors Is Crucial For Industrial Growth: PHDCCI Chief

Hemant Jain, Managing Director of KLJ Group and president of PHD Chamber of Commerce and Industry (PHDCCI), recently met Finance Minister Nirmala Sitharaman to discuss strategies for boosting economic growth. Speaking to Bizz Buzz, Jain highlighted the need for a simplified tax structure to benefit individuals, firms, and LLPs, alongside expanding the Production Linked Incentive (PLI) scheme beyond its current 14 sectors.

"Lowering compliance costs and focusing on ease of doing business at the factory level are critical for growth," Jain emphasised. He also called for enhanced workforce upskilling, infrastructure development, and robust implementation of existing reforms. Advocating for sustainable practices, Jain suggested harmonizing industry needs with environmental goals through public-private partnerships and green technologies

What are the biggest challenges that the manufacturing industry faces today?

We appreciate the consistent efforts of the government to stimulate industrial growth through its strategic policy measures. To further enhance the growth of India’s industrial sector, there is a need to focus on enhanced percolation of ease of doing business at the factory level, further reduce the costs of doing business—including the costs of capital, power, logistics, land, and compliances—boost impetus to MSMEs [micro, small and medium enterprises], and ensure effective implementation of the existing reforms at the ground level.

What are the biggest challenges that the services sector faces today?

India has a flourishing service sector, with robust exports growing at about 15 per cent (April-November 2024). We suggest focusing on further development of infrastructure and facilitation of technology adoption, given the dynamic global economic ecosystem, to boost India’s services sector to a higher growth path.

You favour the expansion of the Production Linked Incentive (PLI) scheme beyond the 14 sectors. However, the PLI scheme has succeeded only in a few sectors. What do you recommend to make it successful in all industries?

The PLI Scheme is adding great impetus to the growth of the manufacturing sector of India. At the national level, the PLI Scheme is boosting the creation of global manufacturing hubs. To expand the reach of the Scheme further, there is a need to focus on further reduction of the costs of doing business. Additionally, the availability of funds is crucial as every business needs adequate financing to operate and thrive, which could be another area of focus.

You want capital expenditure by the government to rise from Rs 11.11 lakh crore in 2024-25 to over Rs 13 lakh crore in 2025-26. Is the private sector also spending as much as it can?

We appreciate the government’s proactive initiatives aimed at stimulating private investments. India’s consistently growing GDP and per capita income will boost consumer demand, coupled with significant capital expenditure and strong infrastructure. Logistics support will create a conducive environment to spur private investment. This will stimulate the private sector to come forward and boost private investments.

What do you suggest businesspersons do to become globally competitive?

India holds a strong position in the global market on the back of continued hand-holding by the government. To further enhance India’s global competitiveness, there is a need to boost the manufacturing sector's growth further with a focus on enhanced investments and employment creation. Additionally, accelerating the production of export-oriented units to elevate India's engagement in global value chains will also boost global competitiveness. The performance of the country's logistics industry is crucial for its competitiveness in export markets and its ability to secure imports needed for production and consumption reliably and affordably. Therefore, there is a need to further strengthen the logistics infrastructure of the country.

Job creation remains a big problem. What needs to be done?

The government's increased expenditure has played a significant role in enhancing the labor market scenario by generating more productive jobs, which is highly appreciable. Skill development initiatives and vocational training programmes have contributed to upgrading and re-skilling the workforce. Focused policies should be implemented to further facilitate the growth of MSMEs to boost employment. Additionally, efforts should be made to establish a favourable regulatory environment for job creation and align educational curricula with practical field training. Most importantly, the government should strive to fulfill all the vacant positions at the national and state levels.

The government’s emphasis on ease of doing business is persistent, yet regulation and compliances continue to bother businesspersons. How to improve the situation?

We appreciate the government’s efforts to enhance the Ease of Doing Business in the country. The government has removed over 42,000 compliance requirements and decriminalized more than 3,800 legal provisions. These pivotal reforms not only simplify the regulatory landscape but also reflect a strong focus on implementing changes at the state level. Additionally, the introduction of a National Single Window System has streamlined the processes, further facilitating business operations and encouraging investment. There is a need to focus on enhanced percolation of ease of doing business at factory level.

The government slashed corporate tax rates, introduced PLI schemes, and offered other incentives to boost manufacturing. Yet, manufacturing remains a matter of concern. What more can be done to galvanize the sector?

India’s manufacturing sector is growing steadily. We suggest a reduction in the rates of taxation for individuals and limited liability partnership (LLP) firms. Partnership firms/LLP tax rates remain highest at 30 per cent plus surcharge. So, we suggest that the topmost tax slab be restricted to 25 per cent for individuals and LLP firms.

How keen are Indian businesspersons to adopt new technologies like artificial intelligence and machine learning?

India stands at the cusp of a technological revolution, with artificial intelligence (AI) and machine learning (ML) poised to redefine industries, governance, and economic growth. The question is not whether Indian businesspersons are keen to adopt these technologies, but how swiftly and strategically they can integrate them into their operations.

The India AI Mission, with its ambitious outlay of over Rs 10,000 crore, underscores the government’s commitment to fostering an AI-driven ecosystem. This initiative aims to establish India as a global AI hub by supporting startups, building computational infrastructure, and promoting ethical AI frameworks. For businesses, this translates into unprecedented opportunities to innovate, scale, and compete globally.

Recent data reveals that over 60 per cent of Indian enterprises are actively exploring AI adoption, with sectors like healthcare, finance, and retail leading the charge. The generative AI market alone is projected to grow at a CAGR of 32 per cent by 2030. However, challenges such as skill gaps, data privacy concerns, and infrastructure limitations persist.

As we move forward, businesses must embrace these advancements not just for competitive advantage but also to contribute meaningfully to India's vision of a $5-trillion economy. The enthusiasm among Indian businesspersons for AI and ML is palpable; they are driven by strategic initiatives and a commitment to innovation that will define our economic landscape in the future.

Environmental degradation goes on unabated. How can the interests of the industry be harmonized with those of a clean environment?

Environmental degradation remains one of the most pressing challenges of our time, yet it is not an insurmountable one. The key lies in harmonizing industrial growth with environmental sustainability—a balance that is both achievable and imperative.

India’s commitment to net-zero emissions by 2070, as announced at COP26, and the ambitious target of meeting 50 per cent of energy needs through renewables by 2030 provides a robust policy framework. The National Green Hydrogen Mission, with an outlay of Rs 19,744 crore, aims to position India as a global leader in green energy, reducing carbon emissions while creating new industrial opportunities. However, achieving this harmony requires collaborative action. Public-private partnerships, innovative financing mechanisms like green bonds, technology-driven solutions such as carbon capture, and AI-enabled resource optimization are critical.

The interests of industry and the environment are not mutually exclusive. By leveraging progressive policies, embracing sustainable practices, and fostering collaboration, we can ensure economic growth while safeguarding our planet for future generations.

By investing in green technologies and fostering partnerships between government, industry, and civil society, we can create a sustainable economic model that prioritizes both growth and environmental stewardship.

In your Budget recommendations to the FM, you favoured a simplified tax structure that can reduce compliance costs and increase disposable income. Does it include cuts in personal income tax?

We have proposed lowering tax rates on individuals, firms, and LLPs. To encourage more individuals to switch to electric vehicles (EVs), the government may consider expanding the scope of coverage of Section 80EEB by introducing the following measures:

- Income tax amount of deduction to Rs 500,000

- Extending the loan sanction period beyond 31 March 2023

- Introducing parity by allowing this deduction to individuals under the default tax regime as well

Goods and services tax (ST) is outside the purview of the Budget. Still, what would you recommend to the Finance Minister over the issue of multiple rates?

GST rate changes will come through GST council meetings only and not through Budget. However, 28 per cent GST on cement can be flagged. Cement is neither a luxury good nor a sin good. It is an essential input related to housing requirements and thus there is no justification for keeping it in the 28 per cent bracket.