The Production Linked Incentive (PLI) scheme, a flagship initiative of the Indian government to boost domestic manufacturing, has been hogging the limelight over the past few years. While electronics, pharma, and automobiles have garnered maximum attention and investment, an unexpected sector has quietly created the most jobs under this scheme: food products. These humble products, which have been a staple of Indian cuisine for centuries, have managed to achieve this feat with relatively low levels of investment, leaving many in the business community stunned and intrigued.
Low-Hanging Fruit or a Hidden Gem?
The data paints a fascinating picture: while electronics and pharma have cornered the lion’s share of investments, food products have created nearly twice as many jobs. According to government figures, the food sector has created a whopping 2.5 million jobs, dwarfing the numbers in electronics and pharma, which stand at 1.3 million and 1.2 million, respectively. This is a staggering achievement, especially considering that the food sector has traditionally been seen as a low-margin business, with minimal opportunities for scalability and growth.
So, what’s behind this remarkable success? Experts point to a combination of factors, including the government’s focus on enabling small and medium-sized enterprises (SMEs) in the food sector, the increasing demand for processed and packaged food products, and the relatively low barriers to entry in this sector. Additionally, the PLI scheme’s focus on encouraging companies to set up manufacturing units in rural areas has helped to create jobs in regions that were previously neglected.
Pharma and Automobiles: The High-Investment, Low-Jobs Paradox
A closer look at the data reveals that while pharma and automobiles have attracted massive investments, they have created relatively few jobs. The pharma sector, for instance, has seen investments worth over ₹12,000 crores, but has managed to create only 1.2 million jobs. Similarly, the automobile sector, which has attracted investments worth over ₹20,000 crores, has created a measly 1.1 million jobs. This paradox has left many in the business community scratching their heads, wondering why such high levels of investment have failed to yield commensurate job creation.
Experts suggest that this may be due to the high capital intensity of these sectors, which has led to a focus on mechanization and automation, resulting in fewer jobs being created. Additionally, the increasing focus on research and development in these sectors has led to a shortage of skilled labor, further exacerbating the job creation challenge.
A Lesson in Unconventional Strategy
The success of the food sector in creating jobs under the PLI scheme is a valuable lesson in unconventional strategy. It highlights the importance of focusing on sectors that have traditionally been overlooked, and creating an enabling environment for SMEs to thrive. As the government looks to scale up its PLI scheme to new heights, it would do well to take a page from the food sector’s playbook, and create opportunities for small and medium-sized businesses to create jobs and drive growth in the economy.
As the Indian economy continues to navigate its way through the choppy waters of a global pandemic, the lessons from the PLI scheme are more relevant than ever. By focusing on sectors that have been quietly creating jobs, the government can create a more inclusive and sustainable growth narrative that benefits all sections of society.
