PLI Scheme for LED Lights and Air Conditioners to Boost Local Manufacturing

The Union Cabinet, on Wednesday, approved the Production Linked-Incentive (PLI) Scheme for White Goods (Air Conditioners and LED Lights). The Union Cabinet provided a budgetary outlay of Rs.6,238 crore for the PLI scheme for white goods.

The PLI scheme’s objective is to make India globally competitive in the manufacturing sector by creating economies of scale, removing sectorial disabilities, and ensuring efficiency. The PLI scheme aims to make India an integral part of the global supply chain as it is designed for creating a complete component eco-system in India. It intends to attract international investments, enhance exports substantially and generate massive employment.

The PLI scheme gives a 4% to 6% incentive on the incremental sales of the goods manufactured in India. The PLI scheme gives incentive for five years to the companies engaged in the manufacturing of LED lights and air conditioners. This scheme has embarked on various categories of components in many segments to target global investments in the desired areas. 

There will be a selection of companies for the PLI scheme to incentivise the manufacturing of sub-assemblies or components that are not currently manufactured in India sufficiently. However, the PLI scheme does not provide an incentive for the mere assembly of the finished goods.

The companies that meet the various target segments’ pre-qualification criteria are eligible to participate in this scheme. The investments are open to companies making greenfield or brownfield investments. For claiming incentives under this scheme, the companies need to meet the threshold of cumulative incremental sales of manufactured goods and cumulative investment over the base year. 

The companies availing benefits under any other PLI scheme of the government cannot claim benefit under this PLI scheme for the same products. The government has approved nine PLI schemes till now for different sectors. The companies may obtain benefits under other applicable schemes of the Central Government or the State Government schemes. This scheme’s implementation will be on a pan-India basis and will not be specific to any location, segment of population or area. 

The PLI scheme will help achieve growth rates that will be much higher than the existing ones in the air conditioners and LED industries. It will develop a complete component eco-system in India while also making India a global manufacturing champion. 

The companies will have to mandatorily meet the BIS (Bureau of Indian Standards) and BEE (Bureau of Energy Efficiency) quality standards for the domestic market’s sales and the applicable standards for the global market sales. It will lead to investments in innovation, research and development (R&D) and upgrading technology.

The PLI Scheme for White Goods will benefit many domestic and global companies, including Micro, Small and Medium Enterprises (MSME). It will cause a significant impact on the MSME sector and increase growth and employment opportunities. This scheme will help India achieve the vision of ‘Atmanirbhar Bharath’ and make domestic companies compete globally.

There is an expectation that the PLI scheme will cause an incremental production worth Rs.1,68,000 crore, investment of Rs.7,920 crore and exports worth Rs.64,400 crore over five years. It will also create an additional four lakh employment opportunities, directly or indirectly. 

The PLI Schemes are a significant factor for MNCs that want to diversify their supply chains. This scheme gives a boost to local manufacturing. It will bring investments and also give domestic companies opportunities to form joint ventures and enter into technical tie-ups. The different PLI schemes approved by the government will help India to become a global manufacturing hub.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in