To incentivise the manufacturing sector and generate employment, the government may extend the scope of the PLI scheme to include sectors like garments, jewellery and handicrafts in the forthcoming interim Budget, Deloitte said.

Currently, the Production-Linked Incentive (PLI) scheme is available for 14 sectors.

Deloitte India Partner Rajat Wahi said driving rural income is one of the ways to deal with inflation and slack in consumption demand.

"Today we have 14 sectors under the PLI scheme, but a lot of these sectors do not generate massive employment. Leather, garment, handicraft, jewellery -- many of these sectors need PLI scheme to come in because they are the ones which are the highest employment generators. That will help lower income households as well as urban," Wahi told PTI.

Deloitte in its Budget Expectations report said the government is expected to come out with measures to support sustainable growth in income amongst rural households, thereby boosting the rural economy's disposable income.

"One of the ways could be higher spending on building rural infrastructure or providing incentives that improve cash flow... Broadening the scope of PLI schemes to sectors such as chemicals and services can create demand for more manufacturing," Deloitte said.

The PLI scheme was announced in 2021 for 14 sectors, including telecommunication, white goods, textiles, manufacturing of medical devices, automobiles, speciality steel, food products, high-efficiency solar PV modules, advanced chemistry cell batteries, drones, and pharma, with an outlay of Rs 1.97 lakh crore.

PLI schemes have witnessed over Rs 1.03 lakh crore of investment till November 2023, which has led to production/sales of Rs 8.61 lakh crore and employment generation of over 6.78 lakhs.

As many as 746 applications have been approved in 14 sectors with an expected investment of over Rs 3 lakh crore.

The purpose of the schemes is to attract investments in key sectors and cutting-edge technology; ensure efficiency and bring economies of size and scale in the manufacturing sector, and make Indian companies and manufacturers globally competitive.

Deloitte further said PLI schemes are also needed for space tech startups to boost local manufacturing and encourage capacity building within the country. This will help incentivise domestic production and attract investment by providing financial incentives to manufacturers based on their output.

The interim Budget 2023-24 is scheduled to be presented by Finance Minister Nirmala Sitharaman on February 1.