Govt notifies Rs 6k cr PLI scheme for AC, LED light manufacturing

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SME Times News Bureau | 17 Apr, 2021
The Department for Promotion of Industry and Internal Trade (DPIIT) has notified the Production Linked Incentive (PLI) scheme for white goods -- air conditioners and LED lights, with a budgetary outlay of Rs 6,238 crore.

With this, the new scheme has become operational and all eligible manufacturers can now take the benefit of financial incentives provided under it to boost capacity.

The PLI scheme for White Goods (PLIWG) proposes a financial incentive to boost domestic manufacturing and attract large investments in the White Goods manufacturing value chain. Its prime objectives include removing sectoral disabilities, creating economies of scale, enhancing exports, creating a robust component ecosystem and employment generation.

As per the notification, the PLI scheme for white goods will extend an incentive of 4-6 per cent on incremental sales of goods manufactured in India for a period of five years to companies engaged in manufacturing of air conditioners and LED lights. The period of five years will be calculated subsequent to the base year and one year of gestation period.

The applicant will have to fulfill both criteria of cumulative incremental investment in plant and machinery as well as incremental sales over the base year in that respective year to be eligible for PLI. The first year of investment will be FY 2021-22 and the first year of incremental sale will be FY 2022-23. Actual disbursement of PLI for a respective year will be subsequent to that year.

One entity may apply for one target segment only. However, separate Group companies may apply for different target segments. Further, sales by entities to their group companies should be at an arm's length price as those to outside group companies.

Different segments have been earmarked for different types of components separately to specifically target global investments into desired areas.

Selection of companies for the scheme shall be done so as to incentivise manufacturing of components or sub-assemblies which are not manufactured in India presently with sufficient capacity, said the notification, adding that mere assembly of finished goods shall not be incentivised.

Companies investing in basic/core components shall have a higher priority. Also, within a target segment, 'Large Investment' shall have a higher priority over 'Normal Investment'. The actual number of beneficiaries within a target segment shall be decided on the basis of the response of the industry.

Companies meeting the pre-qualification criteria for different target segments will be eligible to participate in the Scheme. Incentives shall be open to companies making brown field or green field Investments.

Thresholds of cumulative incremental investment and incremental sales of manufactured goods over the base year would have to be met for claiming incentives.

An entity availing benefits under any other PLI Scheme of the Centre will not be eligible under this scheme for the same products but the entity may take benefits under other applicable schemes of the union government or schemes of state governments.

An Empowered Group of Secretaries (EGoS) chaired by Cabinet Secretary will monitor the PLI scheme, undertake periodic review of the outgo under the scheme, ensure uniformity of all PLIs and take appropriate action to ensure that the expenditure is within the prescribed outlay. In addition, EGoS will be empowered to make any changes in the modalities of the scheme within the overall financial outlay of Rs 6,238 crore.

As per the government, it is estimated that over the period of five years, the PLI scheme will lead to incremental investment of Rs 7,920 crore, incremental production worth Rs 1.68 lakh crore, exports worth Rs 64,400 crore, earn direct and indirect revenues of Rs 49,300 crore and create additional four lakh direct and indirect employment opportunities.