PLI Scheme for White Goods (ACs and LED Lights)

Context:

A total of  52 companies have filed their application with committed investment of Rs 5,866 crore under the PLI Scheme for White Goods to incentivize the domestic manufacturing of components of White Goods (Air conditioners and LED lights)

What are White Goods?

White goods refer to heavy consumer durables or large home appliances, which were traditionally available only in white. They include appliances such as washing machines, air conditioners, stoves, refrigerators, etc. The white goods industry in India is highly concentrated. Indian appliance and consumer electronics (ACE) market reached INR 76,400 crore (~$10.93 bn) in 2019. Appliances and consumer electronics industry is expected to double to reach INR 1.48 lakh crore (~$21.18 bn) by 2025.

The Indian LED Lights sector encompasses different segments like automotive lighting, general lighting and backlighting in commercial, residential, and industrial applications. The expected revenue growth in the Indian LED lighting market is at 12% CAGR.

The prime objective of the PLI scheme is to make manufacturing in India globally competitive by removing sectoral disabilities, creating economies of scale, and ensuring efficiencies. It is designed to create a complete component ecosystem in India and make India an integral part of the global supply chains. The scheme is expected to attract global investments, generate large-scale employment opportunities and enhance exports substantially.

PLI Scheme for White Goods

• The PLI Scheme for White Goods shall extend an incentive of 4% to 6% 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.
• An entity availing benefits under any other PLI Scheme of Govt. India will not be eligible under this scheme. 
• It will be implemented as a pan India scheme. 
• A number of global and domestic companies, including a number of MSMEs are likely to benefit from the Scheme.
• Benefits: 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. 1,68,000 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.

Eligibility

Applicant can be any company that should be incorporated in India under the provisions of the Company Act, 2013. Eligibility shall be subject to the achievement of thresholds of net incremental sales of Eligible Products for the respective financial year over the base year and cumulative incremental investment in the preceding financial year.

The Scheme is fund limited:

1. For Air Conditioners: Net incremental sale of the eligible product(s) up to 5 times of the cumulative threshold investment in the previous financial year
2. For LED Lights: Net incremental sale of the eligible product(s) up to 6 times of the cumulative threshold investment in the previous financial year

Pre-Qualification Criteria

Threshold investment prescribed for eligibility:

• Gross Block: Gross Value of Plant, Machinery and Equipment in the audited financial statements:
• 50% of threshold investment 
• Global Manufacturing Revenue: Consolidated Revenue both in India and overseas, in the audited financial statement in the Base Year i.e., 01 April 2019 to 31 March 2020:

• 5 times of threshold investment for the ‘Large Investment’ category 
• 4 times for the ‘Normal Investment’ category
• Net Worth: Aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account, after deducting the aggregate value of the accumulated losses, deferred expenditure, and miscellaneous expenditure not written off, as per the audited balance sheet
• 30% of threshold investment

Selection Criteria

• Mere assembly of finished goods shall not be incentivized.
• Applicants proposing to manufacture items deeper into the value chain of Eligible Products shall have a higher priority in selection.
• Within a target segment, the ‘Large Investment’ category shall have a higher priority over the ‘Normal Investment’ category.

Target Segments

Source: PIB

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