Industry

GS paper-III:
• Changes in Industrial Policy and their Effects on Industrial Growth.
• Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
 Production Linked Incentive scheme

Objective:
Q) Which of the following statements is/are
Boost domestic manufacturing
correct about Production Linked Incentive(PLI)
Reduce imports
scheme?
Create employment
1. The scheme aims at boosting domestic
Enhance competitiveness in global markets
manufacturing in India.
2. Incentives under the scheme are applicable
Production Linked Incentive scheme

Various eligibility criteria:

to those companies who make incremental
Incremental sales
exports over the base year.
Incremental investment
3. The scheme is applicable to only domestic
Incremental turnover
companies.
4. The incentives are provided in the form of tax
Base year: 2019-20. exemptions.
Select the correct answer using the code given
below:
Incentives: financial incentives are provided as a a) 1 only
share of incremental sales.
b) 1 and 3 only
c) 2 and 3 only
d) 3 and 4 only
Sectors: Extended to around 14 sectors including
Pharma, Medical devices, Telecom, Food Processing,
Textiles & Drones etc.
Share of manufacturing sector in total GVA
50

45

40

35

30

25

20 18.4 18.5
17.1 16.9 17.3

15

10

0
FY20 FY21 FY22 FY23 FY24

Source: Economic survey 2023-24

 Favours large
firms

Challenges with the

Breeds Sector specific
inefficiency implementation of PLI needs
scheme

Does not address

structural issues
Coal Sector
 Energy
dependence

Industrial Contributions to
input Railway freight
Why is Coal
indispensable to
Indian economy?

Government
Employment
revenues
Source: Central Electricity Authority
 Coal gasification

Oxygen (O2) Steam (H2O)

Electricity

Coal Syngas

Refined Products
 Availability
of feedstock

High capital
Inter-ministerial
requirements
coordination

Challenges to coal
gasification in India

Market for
downstream Technology
products

Infrastructure
 Allocation and
linkages

Gasification
Single window
Technology
clearance system
Adoption
Steps to be
taken

Market development
Financial incentives for downstream
products
Q) Despite continued efforts to phase out coal, it remains indispensable to the Indian economy. In this context,
explain how the technology of coal gasification can address the environmental and economic challenges
associated with India's continued coal dependency.
Q) What are the key challenges associated with transition to coal gasification in India and suggest
suitable policy measures to make it commercially viable in India.
 MSME sector

Category Investment (in cr) Turnover (in cr)

Micro 1 5
Small 10 50
Medium 50 250
 Financial issues

Marketing Challenges faced by Infrastructural

issues MSMEs issues

Policy and
Regulation related
issues
 Financial issues
1) Access to credit: 3) GST delays:
(As per UK Sinha report (2019), the overall
credit gap in the MSME sector is estimated to
be Rs. 20-25 lakh crore)

2) Delayed payments:
 Infrastructural issues

1) Land 2) Electricity

3) Rural broad band connectivity

 Policy related issues

1) Incentives to remain dwarf: 2) High cost of compliance

Priority Sector Lending

Credit Guarantee Fund scheme

Purchase preference policy

GST composition scheme

3) Inadequate data on MSMEs

 Credit Guarantee Fund
Scheme for Micro and Small
Enterprises (CGMSE)

PM PM MUDRA
Vishwakarma yojana

Various initiatives
taken by the govt

SFURTI TReDS
Credit Guarantee Fund Scheme for Micro and Micro Units Development & Refinance Agency Ltd (MUDRA):
Small Enterprises (CGMSE): • Objective: Development and refinancing of micro units
• Objective: To make available collateral-free enterprises.
credit to the micro and small enterprise sector. • Loans:
• Guarantee cover: • The loans under PM MUDRA scheme can be availed
• The guarantee cover available under the through lending institutes like Banks, RRBs, SFBs,
NBFC, MFI etc.
scheme is to the extent of 75 percent of • The MUDRA loans are extended under three
the sanctioned amount of the credit categories :
facility. • Loans upto ₹50,000/- (Shishu)
• The extent of guarantee cover is 80-85 per • Loans from ₹50,001 to ₹ 5 lakh (Kishore)
cent for MSEs operated by women and • Loans from ₹ 5,00,001/- to ₹ 10 lakh (Tarun)
located in North-East Region.
• Interest rates: As per the policy of the bank but must peg
their interest rates as advised by MUDRA ltd.
Credit Guarantee Fund
Trust for Micro and
Small Enterprises
(CGTMSE)

Banks

Loan
s
Micro and Small
Enterprise
Q) Which of the following statements is/are correct .Q) Pradhan Mantri MUDRA Yojana is aimed at:
about Credit Guarantee Fund Scheme for Micro and (2016)
Small Enterprises? a) bringing the small entrepreneurs into formal
1. The objective of the scheme is to make available financial system
collateral-free credit to the micro and small b) providing loans to poor farmers for cultivating
enterprise sector. particular crops
2. The scheme provides 100% guarantee cover to the c) providing pensions to old and destitute persons
loans provided to micro and small enterprise sector. d) funding the voluntary organizations involved in
the promotion of skill development and
Select the correct answer using the code given below: employment generation
1 only
2 only Q) Which of the following statements is/are correct with
Both 1 and 2 respect to Pradhan Mantri MUDRA Yojana ?
Neither 1 nor 2 1. Three categories of loans are provided under the
scheme.
2. Rates of interest for these loans are fixed by the RBI.
3. Crop loans are covered under the scheme.
Select the correct answer using the code given below:
a) 1 only
b) 1 and 2 only
c) 1 and 3 only
d) 1, 2 and 3
 To help MSMEs unlock working capital,
the turnover threshold for mandatory
Insurer onboarding on the TReDS platform will
be reduced from ₹500 crore to ₹250
crore. This change will bring 22 more
central public sector enterprises
Goods/Services (CPSEs) and 7,000 additional companies
onto the platform.

Buyer
Trade Receivables
Supplier electronic
Corporates
Discounting system
MSME PSUs
(TReDS)
Govt depts

Invoice

Financiers
Banks
NBFC factors
Q) Consider the following statements regarding
TReDS platform:
1. TReDS is an electronic platform for facilitating
the financing/discounting of trade receivables
to Micro, Small and Medium Enterprises
(MSMEs)
2. Only MSMEs can participate as sellers in TReDS
3. TReDS platform is regulated by SEBI
Select the correct answer using the code given
below:
a) 1 only
b) 1 and 2 only
c) 1 and 3 only
d) 1, 2 and 3
Scheme of Funds for Regeneration of Traditional Industries (SFURTI)
• Objective: Making Traditional Industries more productive Advantages of cluster-based development:
and competitive by organizing them into clusters to
provide support for their long-term sustainability and
economies of scale.
• Setting up of common facilities, support for development
of new products, designs, market promotion, capacity
building activities.
 PM Vishwakarma
PM Vishwakarma is a holistic Scheme that provides end-to-end support to
the artisans and craftspeople through the following components:

Q) With reference to PM Vishwakarma scheme,

PM Vishwakarma consider the following statements:
Certificate and ID
Card
1. Artisans from specified traditional trades in
unorganised sector are eligible for the
scheme.
2. Benefits are restricted to only one member
Marketing of the family.
Skill training
Support
3. The scheme provides unconditional credit
Benefits under support to the eligible artisans.
PM Vishwakarma How many of the statements given above are
correct?
a) Only one
b) Only two
c) All three
Incentive for Digital Credit Support d) None
Transaction
 A self-financing guarantee fund will provide coverage up to ₹100
crore per applicant, with borrowers required to pay an upfront
and annual guarantee fee
Self-financing
guarantee fund
The limit for Mudra loans will be increased to ₹20
lakh from the current ₹10 lakh for entrepreneurs New credit assessment models based on
who have successfully repaid previous loans under digital footprints rather than traditional
the ‘Tarun’ category. metrics like turnover. This will also cover
MSMEs without a formal accounting
system.

New Assessment
Enhanced Limit for Budget 2024 on
Model for MSME
Mudra Loans MSMEs
Credit

A new mechanism will ensure continued bank credit to

MSMEs during stressful periods, particularly when they
are in special mention accounts (SMA) due to
uncontrollable circumstances, helping them avoid falling
into non-performing asset (NPA) status.

Credit Support During

Stress Periods
Q) Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of
MSMEs. Comment on the present policies of the Government in this regard. (2023)
 Sunset clause
for govt benefits

Separate PLI Adoptions of

scheme for new labour
MSME sector codes

Way forward

Flexible land and Tax exemptions to

building MSMEs for hiring
regulations female labour
Service Sector
Q) The service sector has been the primary driver of economic growth in India during the post-liberalisation period.
In this context, explain the significance of the service sector to the Indian economy and the concerns associated with
service-led economic growth. Contributes around 55% of
GDP

Service sector complements economic

development with human development with GDP growth accounts for about 40% of India's total
services like Education, Health and financial. exports.

Human Exports
development

Significance of service
sector in India
Enhances overall efficiency of the Supports manufacturing sector by
economy by providing services like providing services like Logistics, transport,
skill development, R&D skill development, R&D etc.

Enhances Total Development of

Factor Productivity Manufacturing sector
 Low employability in sectors Increase in contribution of services sector has
such as Financial Services, been due to increase in labour productivity and
Professional services, Trade adoption of technology rather than increase in
etc. employment.
Services sector is mainly dominated by
Low IT-BPM and Financial services, while
Employment other sub-sectors such as Tourism,
Elasticity Transportation, Communication have
registered lower growth.
Data privacy Uneven growth of
and different sub-
cybersecurity sectors • Imposed by other countries. E.g.,
Strict Visa norms, Withdrawal of
GSP benefits.
shortage of skilled talent in
• Imposed by India. E.g., Stringent
the STEM sector
Challenges to service medical visa regulations.
led economic growth
Skill gap Market access
barriers
As highlighted by Surjit Bhalla Committee on FTAs,
India has failed to capitalise on its strengths in
Inefficiencies in Logistics, Transport services sector to boost exports to FTA partner
Under-utilisation countries.
(Airways and Waterways), Tourism Infrastructural
infra. of Free Trade
bottlenecks
Agreements
 Cross Border: Consumption abroad:
Service exports Services which
Services, which are
made available within a
Service provider Domestic themselves cross- country for foreign
individual/entity frontiers from one country to consumers.
another.
Service consumer Foreign e.g., tourism, educational
e.g., Distance learning, students for students,
individual/entity consultancy, BPO services. medical treatment etc.

Movements of natural
persons:
Commercial Presence:
Individual is present abroad
Services supplied by an entity to provide a commercial
of one country, which is service.
commercially pressed in
another e.g., an engineering
consultant may travel
e.g., banking. abroad to oversee aspects of
a building project