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 Department for Promotion of Industry and Internal Trade (DPIIT) has issued further Clarification on provisions of the PLI Scheme for White Goods vide a Circular dated 11.02.2021. The Circular contains clarifications on various issues of the PLI Scheme for White Goods in the form of frequently asked questions (FAQs).
The Production Linked Incentive (PLI) Scheme for White Goods (PLIWG) provides financial incentives to boost domestic manufacturing and attract large investments in the White Goods manufacturing value chain.
The key objectives of the scheme are
- The Scheme aims to give a financial incentive to boost domestic manufacturing.
- Attract large investments in the manufacturing value chain.
- The prime objective; removing sectoral disabilities, creating economies of scale, enhancing exports, creating a robust component ecosystem, and employment generation.
Incentive Offered
The PLI Scheme for White Goods shall extend an incentive of 4% to 6% on net incremental sales (net of taxes) over the base year (FY 2019-2020) of goods manufactured in India or net incremental sales of eligible products over the base year or FY 2020-21, whichever is higher.
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:
- 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.
- 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.
- 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.
Eligible Applicant for PLI Scheme
- Any company incorporated in India and as defined under the provisions of the Companies Act 2013 and Companies Act, 1956, to manufacture one or more eligible products under the specified target segments are eligible for the scheme.
- Any company incorporated in India and as defined in the Companies Act 2013, proposing to manufacture one or more eligible products under the specified target segment can be an applicant.
Pre-Qualification Criteria under PLI Scheme
- The applicant should be a company incorporated in India under the provisions of the Companies Act, 2013
- Foreign (non-resident) investment in the Applicant Company shall comply with the FDI Policy 2020, as amended from time to time
- An applicant must propose setting up of greenfield or brownfield project for manufacturing of one or more eligible products under any investment category in the respective target segment as defined in the scheme guideline
- An applicant should commit to setting up manufacturing facilities to manufacture eligible products along with appropriate quality and testing facilities conforming to prescribed Standards commensurate with committed incremental sales
- The minimum amount of (i) Gross Block (ii) Global Revenue (iii) Net Worth of the applicant and its group companies (Indian or overseas) as of 31 March 2020 or 31 March 2021
- Value-Added Resellers shall not qualify under the scheme
- The applicant and its group company should neither have been declared as bankrupt or willful defaulter or defaulter nor reported as fraud by any bank or financial institution or non-banking financial company
- An applicant availing benefits under any other PLI scheme of the Government of India for the same product shall not be eligible under this PLI scheme
Eligible Products under PLI Scheme
Target Segment and Eligible Products – Air Conditioners
ACS (Components)
- High-value Intermediaries of ACs
- Low-Value Intermediaries of ACs
- A combination of High-value Intermediaries of ACs and Low-Value Intermediaries of ACs
High-Value Intermediaries of ACs
- Compressors including oil-free and high capacity
- Copper Tube (plain and/or grooved)
- Aluminum Stock for Foils or Fins for heat exchangers
Low-Value Intermediaries of ACs
- Control Assemblies for IDU or ODU or Remotes
- Display Panels (LCD/LED)
- Motors
- Cross Flow Fan (CFF)
- Valves & Brass components
- Heat exchangers
- Sheet Metal components
- Plastic Moulding components
Target Segment and Eligible Products – LED Lights
LED (Core Components)
- LED Chip Packaging
- Integrated Circuits (ICs)
- Resistor
- Fuses
- Large-scale investments in LED components
LED (Components)
- LED Chips
- LED Drivers
- LED Engines
- LED Modules
- Printed Circuit Boards (PCB) including Metal clad PCBs
- Mechanicals- Housing
- Wire Wound Inductors
- Drum Corps
- Heat Sinks
- Diffusers
- Ferrite Cores
- LED Light Management Systems (LMS)
- Resistors
- Fuses
- Capacitors
- LED Transformers
- Laminates for Printed Circuit Boards and Metal Clad PCBs
- Metalized film capacitors
Investment categories
There are two investment categories under each Target segment as given below. An applicant can apply under any one of the following investment categories for anyone target segment:
- Large Investment
- Normal Investment
Initial Investment Period (Gestation Period)
The initial Investment period (Gestation period) is the gestation time given for setting up manufacturing facilities to manufacture the eligible products. An applicant may opt for any one of the following initial investment periods
- 1st April 2021 to 31st March 2022
- 1st April 2021 to 31st March 2023
Documents Required for PLIWG Application
- Certificate of Incorporation and Corporate Identification Number
- Memorandum of Association
- Article of Association
- IEM/IL
- MSME Registration Certificate
- Importer Exporter Code (IEC) Registration Certificate
- Audited Financial Statement of FY 2019-2020
- Audited Balance Sheet and Profit and Loss Statement of FY2019-2020
- Chartered Accountant Certificate for existing investment in plant and machinery (Gross Block) Net Sales Revenue and Net worth as on 31.03.2020
- Shareholder Structure
- Top 10 Shareholders list as on 31.03.2020
- Resolution from Board of Directors
- Letter authorizing the signing authority
- Technology Transfer Agreement
- Detailed Manufacturing Process note
- Detailed Manufacturing Flow Chart with inputs required in each stage in the process flow chart and the output at each stage of Manufacturing
- Other Business Agreement
Application Procedure for PLI Scheme for White Goods
- One entity may apply for one category under one target segment only. However, separate Group companies may apply for different target segments.
- The applicant needs to declare the following details on the application for statically purposes :
- Yearly plan Details
- Domestic Value Addition
- Employment Generation
- Exports during the tenure of the scheme
- Upon successful submission of an application, an acknowledgment with a unique Application ID number shall be communicated to the applicant over email as well as through SMS. This acknowledgment shall be constructed as approval under the scheme.
- In case an application is submitted on the last day of the application window, the PMA shall inform the about the deficiency in the application to the applicant within 15 days of submission. After that applicant needs to submit the application completed in all respect by the last day of the month following the date of application window closure. The acknowledgment will thereafter be issued by the PMA.
- The net incremental sales of the eligible products manufactured in the Financial year following the investment period opted by the applicant shall be considered for incentive.
Application Processing
- The PMA will process the applications and make appropriate recommendations for approvals under the scheme to DPIIT.
- Applicants are recommended by PMA shall be considered for approval by DPIIT. The selection of applicants will be finalized within 60 days from the date of closure of the application window.
- Selected applicants need to submit a bank guarantee along with undertakings of an amount equivalent to 0.5% of the committed investment in favor of DPIIT valid for 18 months from the date of the proposed date of commercial production.
- The bank guarantee will be invoked if the actual commercial production is not achieved within 1 year of the originally proposed date of commercial production.
FAQs
What is the PLI Scheme for White Goods?
The Production Linked Incentive (PLI) Scheme for White Goods is a government initiative aimed at boosting the manufacturing of white goods like air conditioners and LED lights in India by providing financial incentives to manufacturers.
What are White Goods under the PLI Scheme?
White goods refer to large home appliances like air conditioners and LED lights that are typically painted white. The PLI Scheme specifically targets these goods to encourage domestic production and reduce imports.