PLI Scheme for Manufacturing White Goods in India

The PLI (Production-Linked Incentive) scheme for white goods is a government initiative aimed at boosting the manufacturing of home appliances in India. The scheme was launched by the Ministry of Electronics and Information Technology (MeitY) in April 2021. The primary objective of the scheme is to promote domestic manufacturing of home appliances like air conditioners, refrigerators and LED lights to reduce reliance on imports, thereby creating employment opportunities and boosting the country's economy.
 

Some Key Features of the Scheme:

• The PLI Scheme for promotion of domestic manufacturing of Air Conditioners and LED Lights in India of up to INR 6,238 crores has been approved to be given over a period of 5 years (from FY 2021-22 to FY 2028-29).
• Under the PLI scheme, White Goods have been divided into three categories:

1. Air Conditioner and Components - Includes air conditioners of all types, such as window ACs, split ACs, and inverter ACs, as well as their components such as copper tubes, aluminium foil, compressors, motors, and controllers.
2. LED Lights and Components - Includes LED lamps, LED tube lights, LED street lights, and other LED lighting products, as well as their components such as LED chips, LED drivers, and MCPCBs (Metal Core Printed Circuit Boards).
3. Refrigerators and Components - Includes all types of refrigerators, such as single door, double door, and side-by-side refrigerators, as well as their components such as compressors, motors, and controllers.

 

Calculation of Incentives:

• The incentives are calculated as a percentage of the incremental sales value and will be paid out annually. The scheme extends an incentive of 4-6% on incremental turnover on the base year of goods sold in India and exported to global markets, to eligible companies for a period of 5 years.

 

Eligibility:

• The entity applying for the scheme must be a company registered in India as per the regulations stated in the Company Act of 2013. The eligibility of the company will be determined based on meeting the net incremental sales thresholds for eligible products during the financial year, compared to the base year, as well as the total incremental investment made in the preceding financial year.
• The company must have a minimum annual sales turnover of Rs. 400 crore for air conditioners and refrigerators, and Rs. 100 crore for washing machines.
• The scheme is fund limited:

1. The requirement for air conditioners is that the net incremental sales of eligible products should be up to five times the cumulative threshold investment made in the previous financial year.
2. The eligibility criteria for LED lights is that the net incremental sales of the eligible product(s) must not exceed six times the cumulative threshold investment made in the previous financial year.

 

Overall Challenges Involved:

Although the PLI scheme for white goods provides incentives and opportunities for eligible manufacturers, there are also some challenges that recipients of the scheme should be aware of:

• In order to participate in the scheme, manufacturers must make significant investments in their manufacturing facilities and production processes. This can be a barrier to entry for the smaller manufacturers who may not have the financial resources to make such investments.
• The PLI scheme is open to both domestic and international manufacturers. Hence, recipients of the scheme tend to face stiff competition from other manufacturers, particularly those from countries with lower production costs.
• This industry is subject to changes and evolution in consumer preferences and market demand. It may become challenging for the manufacturers to anticipate and respond to these changes, particularly if they have made significant investments in production capacity based on past market trends.

 
Overall, the primary goal of the PLI scheme is to improve the competitiveness of manufacturing in India by eliminating sectoral disadvantages, achieving economies of scale, and improving efficiency. Its goal is to create a self-sustaining ecosystem of components within the country and integrate India into the global supply chain. The scheme is anticipated to draw foreign investments, create a significant number of job opportunities, and significantly increase exports
 
To learn more about how to pitch for the PLI scheme, the process of application, disbursement of incentives, the key obligations of the recipient- CLICK HERE.