India Entry & Business Startup Consultings

Production Linked Incentive Scheme (PLI) for White Goods (Air Conditioners and Led Lights) for Manufacturers in India

With the Government approving the Production Linked Incentive (PLI) Scheme for white goods (air conditioners and led lights). The tenure for the scheme is from FY 2021-2022 to FY 2027-28. The implementation period is the financial Year 2021-2022 to 2027-2028, and the incentives to begin from 2022-2027 with 1-year gestation period. The Budgetary Outlay for this scheme would be INR. 6,238 Cr. Also, the Gestation Period can select from either [01.04.2021-31.03.2022] or [01.04.2021-31.03.2023]. The Application Window for this scheme is from 15th June 2021 to 15th September 2021 for the 1st window.

The key objectives of the scheme are: 

  1. The Scheme aims to give a financial incentive to boost domestic manufacturing.
  2. Attract large investments in the manufacturing value chain.
  3. The prime objective; removing sectoral disabilities, creating economies of scale, enhancing exports, creating a robust component ecosystem, and employment generation.

There are some primary target segments for the scheme as follows: 

Companies/entities engaged in manufacturing of components of: 

1.  Air Conditioners:

  • Air Conditioners (Components- High-value Intermediates or Low-Value Intermediates or sub-assemblies or a combination thereof)
  • High-Value Intermediates (Copper Tubes, Aluminum Foil and Compressors)
  • Low-Value Intermediates (PCB assembly for controllers, BLDC motors, Service Valves and Cross Flow fans for AC and other components)

2. LED Lights:

  • LED Lighting Products (Core Components like LED Chip Packaging Resisters, ICs, Fuses and large-scale investments in other components, etc.)
  • Components of LED Lighting Products (like LED Chips, LED Drivers, LED Engines, Mechanicals, Packaging, Modules, Wire Wound Inductors, and other components) 

QUANTUM OF INCENTIVE:

  1. The PLI Scheme shall extend an incentive of 4% to 6% on incremental sales (net of taxes) over the base year of goods manufactured in India and covered under target segments, to eligible companies, for a period of five (5) years subsequent to the base year and one year of gestation period.
  2. 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.
  3. 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.

CONDITION FOR SELECTION OF BENEFICIARIES:

  1. Mere assembly of finished goods shall not be incentivized.
  2. Selection of companies for the Scheme shall be done so as to incentivize manufacturing of components or sub-assemblies which are not manufactured in India presently with sufficient capacity.
  3. Companies investing in basic/core components shall have a higher priority.
  4. Incentive & eligibility per beneficiary: The incentive per beneficiary & eligibility will be applicable on incremental sales (net of taxes) of manufactured goods (as distinct from traded goods) over base year subject to ceilings as may be decided.
  5. FY 2019-20 shall be treated as the base year 
  6. Support under the Scheme shall be provided for a period of five (5) years subsequent to the base year & 1 year of the gestation period for fructifying investment to be implemented over FY 2021-22 to 2027-2028.

TENURE:

  1. The Scheme shall be open for applications for a period of 6 months initially which may be extended.
  2. Applications may also be invited anytime during the tenure of the Scheme for a particular target segment if required.
  3. For applications received post the initial application period, applicants shall only be eligible for incentives for the remainder of the Scheme’s tenure.

ELIGIBILITY:

  1. Incentives shall be given to brownfield or greenfield Investments for manufacturing in target segments in India. (FDI)
  2. (1) Entity may apply for (1) target segment only. However, separate Group companies may apply for different target segments. 
  3. An applicant must meet all the threshold conditions to be eligible for disbursement of incentive. 
  4. The applicant shall, in its application, declare a plan for domestic value addition, employment generation and exports during the tenure of the Scheme.
  5. Investment in Land & Building required for the project or unit will not be covered under the scheme & shall not be considered for eligibility.   

Important Points to Note:

A) All relevant details of the Scheme will be detailed in Scheme Guidelines. for example Eligibility criteria, Quantum of incentive, Pre-qualification criteria for different target segments, Application period (in pdf).
B) An entity availing benefits under any other PLI Scheme of Govt. India will not be eligible under this scheme for the same products but the entity may take benefits under other applicable schemes of Govt. of India or schemes of State governments.
C) The Scheme will be implemented as a pan India scheme and is not specific to any location, area or segment of the population 
D) Applicants will have to meet the compulsory BIS and BEE Quality standards for sales into the domestic market and applicable standards for global markets. 
E) Eligibility of Companies shall be subject to their meeting the pre-qualification criteria for different target segments which will be defined in the Scheme Guidelines.
F) No second-hand plant & machinery for manufacturing of these products.

 

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