Government Renewed PLI White Goods Scheme to Promote Local Manufacturing

The Indian government, in its ongoing efforts to bolster the domestic manufacturing sector, has introduced significant amendments to the Production-Linked Incentive (PLI) scheme for white goods, including air conditioners and LED lights. These revisions come in response to valuable input from industry associations and PLI beneficiaries, aimed at simplifying the scheme's operations and enhancing the ease of conducting business.

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The Indian government, in its ongoing efforts to bolster the domestic manufacturing sector, has introduced significant amendments to the Production-Linked Incentive (PLI) scheme for white goods, including air conditioners and LED lights. These revisions come in response to valuable input from industry associations and PLI beneficiaries, aimed at simplifying the scheme's operations and enhancing the ease of conducting business.

To streamline the PLI scheme, the government has introduced several key changes. First, it replaces the previous Comparable Uncontrolled Price (CUP) method with the cost-plus method for determining sales prices, particularly for captive consumption and supplies to affiliated companies. This alteration also necessitated a redefinition of 'arm's length.'

Moreover, the government now recognizes investments in tool rooms dedicated to manufacturing molds and dies as eligible under Capital Investment. Beneficiaries have also been granted an additional year to notify the establishment of a new manufacturing facility, extending the previous two-year window.

Further improvements include revising the deadline for submitting claims and addressing any discrepancies between statutory compliance and the records provided during the claims process. To ensure adherence to the scheme's guidelines, the administrative ministry will conduct site visits.

Additionally, beneficiaries will benefit from a rollover of bank guarantees and relevant modifications to the scheme's annexures. These changes aim to encourage businesses to invest in white goods manufacturing and contribute to the 'Atmanirbhar Bharat' (Self-reliant India) initiative.

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The PLI scheme for white goods, which encompasses the production of components and sub-assemblies for air conditioners and LED lights, received Cabinet approval on April 7, 2021, with the Department for Promotion of Industry and Internal Trade (DPIIT) formally notifying it on April 16, 2021. This initiative spans seven years, from FY22 to FY29, with a budget allocation of Rs 6,238 crore. The scheme guidelines were initially issued on June 4, 2021.

To ensure smooth implementation of the scheme, two corrigenda to the guidelines were issued on August 16, 2021, and February 24, 2022. As of now, 15 out of the 64 selected beneficiaries who opted for a gestation period up to March 31, 2022, have commenced commercial production. The remaining beneficiaries, with gestation periods extending up to March 31, 2023, are in various stages of implementation.

This PLI scheme aims to foster a comprehensive component ecosystem for the air conditioner and LED lights industry in India, with the ultimate goal of integrating the country into the global supply chain. The DPIIT anticipates that domestic value addition will soar from the current 15-20% to an impressive 75-80%.