As a part of the plans to attract further investment, including from companies moving out of China, India is focusing on two specific themes.
The Centre plans to extend production linked incentives (PLIs), currently in place for electronics and medicines and pharmaceuticals, to more sectors and streamline defunct laws to better ease of doing business.
Some of the sectors that the government is considering to extend PLIs to may include specialised pharmaceutical product makers, textile units, food processing plants, solar panel makers, and automobile components manufacturing. The government is drafting a cabinet note on the same, a senior government official told Moneycontrol.
"Probably decoupling from China is not an immediate possibility in totality. But doesn't mean it can never happen. For starters, we need to focus on what we can do for companies that are moving or plan to move out of China. We need those investments to revive our economy. One of the things that we plan to do is extend PLIs to a host of other sectors," the official, who is deliberating on the discussions, said.
In order to reduce India's dependence on China, the government made 53 bulk drugs eligible for a PLI worth Rs 6,940 crore. The scheme is expected to benefit up to 136 manufacturing units, generating incremental sales of Rs 46,400 crore and significant additional employment generation over the next eight years.
It also announced a Rs 14,000-crore package that would incentivise production of active pharmaceutical ingredients (API) and medical devices in the country. As part of the scheme, it announced a Rs 3,420-crore PLI for promoting domestic manufacturing of medical devices.
Apart from pharmaceuticals and medicines, the government also notified a PLI scheme for electronics and mobile phone sectors in accordance with the National Policy on Electronics. As part of the scheme, incentives of 4-6 percent will be given to electronics companies that manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors, and nano-electronic components such as microelectromechanical systems, in India.
The government also plans to further ease processes to make doing business in India smoother, by doing away with defunct laws that hinder that process.
"Laws are still cumbersome in India and that's one area that needs major focus if we want to attract businesses that want another viable option to China. Processes to set up a business have to be smoothened," the official said.
The government is planning to streamline a host of laws relating to registering of properties, enforcing of contracts, and paying taxes to attract investments into India.
Resolving of disputes, for instance, takes time and involves a lot of costs and to resolve that issue, judicial processes need to be reformed, the official said.
Bilateral Netting of Qualified Financial Contracts Bill is the first step towards reforms aimed at easing processes for doing business. Parliament on Wednesday passed the bill that allows for enforcement of netting for qualified financial contracts. The legislation once passed would enable banks to increase credit limits for counter parties and clients which would be good for the corporate bond market.
Bilateral contracts constitute 40 percent of total financial contracts, while multilateral contracts constitute 60 per cent, finance minister Nirmala Sitharaman said in Parliament.
“The Bill is critical for financial stability in the country. ..This bill actually brings in a firm legal basis for bilateral netting between two counterparties...Multilateral netting has already been taken care of,” she said.