Global Firms Among 19 To Pour In Rs 1,548 Crore In Second Round Of PLI Scheme For White Goods

With major global and domestic companies powering up the government’s Production-Linked Incentive (PLI) Scheme for White Goods (Air Conditioners and LED Lights) with committed investments of Rs 1,548 crore, India is set to see production of components for ACs and LED lights worth Rs 26,880 crore over the next five years.

The scheme will bring the total investment in component manufacturing eco-system of ACs and LED lights industry to the tune of Rs 7,074 crore which includes the new infusion in the second round of applications, Rs 4,614 crore cleared earlier and 911 crore of investment from six companies which have been asked to come through FDI route, all in sync with the government’s intent to attract global investments, generate large-scale employment opportunities and enhance exports substantially.

The push to strengthen indigenous manufacturing is important even more in the context of global supply chain dynamics such as geo-political tensions amidst the Russia-Ukraine crisis which have bearing on import of key components and export opportunities.

The second round of applications for the PLI scheme has drawn applications from 19 companies which includes eight companies for AC components, 11 companies for LED lights and global brands like LG Electronics, Mitsubishi Electric and home grown Adani Copper Tubes, Jindal Poly films, Crompton Greaves, Wipro, Zeco Aircon, Starion India and Swaminathan Enterprises.

The PLI Scheme for White Goods will be implemented over FY 2021-22 to FY 2028-29 with an outlay of Rs 6238 crore, as approved by the union cabinet chaired by Prime Minister Narendra Modi on 7 April 2021 and notified by DPIIT on 16 April last year.

The earlier round too saw robust participation by 42 applicants with committed investment of Rs 4,614 crore and selection as beneficiaries under the PLI scheme which included 26 for ACs manufacturing with committed investments of Rs 3,898 crore and 16 for LED lights manufacturing with committed investments of Rs 716 crore.

The White Goods industry in India which includes heavy consumer durables or large home appliances -- traditionally available only in white -- is highly concentrated. According to industry data, Indian appliance and consumer electronics (ACE) market reached Rs 76,400 crore in 2019. Appliances and consumer electronics industry is expected to double to reach Rs 1.48 lakh crore by 2025.

With this second round of contribution from the PLI scheme, India’s total production of components of ACs and LEDs will be worth about Rs 107,134 crore. The domestic value addition will grow from the current 15-20 per cent to 75-80 per cent in a major boost to Aatmanirbhar Bharat mission.

India’s imports for refrigerators, air conditioners, LEDs and washing machines amounted to $1.74 billion in FY21. India imports white goods primarily from China, Thailand and Vietnam.

The PLI Scheme can be transformative for Indian industry. Currently, components for ACs like copper tubing, compressors, control assemblies for IDU or ODU, heat exchangers and BLDC motors are not manufactured in India with sufficient capacity and hence in line with the government’s push for a stronger Indian manufacturing sector, the companies have filed applications for production of such components.

Similarly, for LED lights, the companies will be manufacturing in India components like LED chip packaging, LED drivers, LED engines, LED light management systems and metallised films for capacitors. Under the scheme, companies get incentive of 6 per cent to 4 per cent on reducing basis on incremental sales for a period of five years subsequent to the base year and one year of gestation period.

In 2021, while addressing a high-level Investor Roundtable on PLI for White Goods organised by DPIIT and FICCI, Secretary, DPIIT Anurag Jain elaborating on the positive impact of the PLI scheme said manufacturing units in over 50 locations across India are coming up will benefit from the PLI Scheme of White Goods in the component chain of AC and LED. These units are located in states of Gujarat, Andhra Pradesh, Goa, Himachal Pradesh, Uttar Pradesh, Uttarakhand, Karnataka, Maharashtra, Telangana, Tamil Nadu, Haryana Rajasthan and West Bengal.

Aside from supply-chain integration, the PLI in White Goods will aid exports, too. White goods is among the nine of total 15 PLI sectors which show an export potential, ranging from 20-80 per cent of the incremental revenue generated.

The PLI Scheme for White Goods can contribute in creating an annual export potential of Rs 2 lakh crore, as per industry analysis. India’s exports for refrigerators, ACs, LEDs and washing machines amounted to $571 million in FY21.

The PLI Scheme can enhance shipments to India’s biggest export destinations in white goods like United Arab Emirates, Sri Lanka, and the United States by making the industry globally competitive with removal of sectoral disabilities, creating economies of scale, ensuring efficiencies and thus positioning India as an integral part of the global supply chains.

Importantly, for the country looking to create employment post the Covid-19 induced massive economic disruptions and joblessness, these 19 investments will generate direct employment of 5,522 persons.

Also Read: How PLI Scheme For White Goods Is Helping India's Air Conditioning Sector Move Towards Domestic Self-Sufficiency