In line with its ‘Aatmanirbhar’ vision, the Government of India has announced various Production Linked Incentive (PLI) schemes which are under approval and implementation stage. The objective of these schemes is to incentivise domestic manufacturing of products in India. One of the sectors eligible for benefits under the PLI Scheme is the white goods sector, which covers components of air conditioners and LED lights.
Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India notified the PLI Scheme on 16 April 2021 and recently issued operational guidelines on 4 June 2021 for White Goods (Air Conditioners and LED Lights) manufacturers in India. The objective of the scheme is to create complete component ecosystem in India and make India an integral part of the global supply chains.
The PLI Scheme will be implemented within the overall financial limits of Rs. 62,380 million over a period of 5 years during FY 2021-22 to FY 2028-29. Eligible Investment made in terms of Scheme guidelines for eligible products, on 1 April 2021 or thereafter, shall be reckoned for considering the incentive under the Scheme. The application window for the Scheme shall be open from 15 June 2021 to 15 September 2021.
The scheme is available only for manufacturer of components for AC and LED Lights with quality and testing facilities and thus mere assembly and value-added resellers will not qualify. The project can be greenfield or brownfield and the investment to be made would cover new plant and machinery, equipment and associated utility, Research and Development and Transfer of technology. There shall be two investment category (1) Large Investment and (2)Normal Investment and initial investment period has two options (i) FY 21-22 (ii) FY 21-23.
| Sr.no. | Target Segment (ACs and LED separately) | Eligible Products (For Large Investment and Normal Investment) |
| 1 | Components | ACs: High Value Intermediaries for ACs covering:Compressors including oil free and high capacityCopper Tube (Plain and/or grooved)Aluminium Stock for Foils or Fins for heat exchangersLow value intermediaries for ACs covering:Control Assemblies for IDU or ODU or RemotesDisplay Panels (LCD/LED)BLDC Motors/MotorsCross Flow Fan (CFF)Valves and Brass ComponentsHeat ExchangersSheet Metal ComponentsPlastic Mouldering Components Combination of both LEDs: LED Chips, LED Drivers, LED Engines, LED Modules, Printed Circuit Board (PCB), Mechanicals-Housing, Wire Wound Indicators, Drum Cores, Heat Sinks, Diffusers, Ferrite Cores, LED Light Management Systems (LMS) |
| 2 | LED Core Components | LED Chip PackagingIntegrated CircuitsResistorsFusesLarge Scale Investments in LED Components |
The minimum amount of Gross Block, Global revenue and Net worth as on 31 March 2020 as prescribed is key criteria for initial eligibility. Additionally, minimum incremental sales and investment as prescribed to be achieved for the purpose of eligibility under PLI scheme. One entity can apply for one or more eligible products under one category under one target segment only. However, separate group companies may apply for different target segments.
The selection of the company shall be done so as to incentivise manufacturing of component or sub-assemblies which are not manufactured in India presently with sufficient capacity and who manufacture more items deeper into the value chain. The actual number of beneficiary shall be decided so as to maximise gross value added to the economy and optimise available financial resources for the scheme. Within the target segment, ‘Large investment’ shall have high priority over ‘Normal Investment’ category.
The incentive rate is between 4 to 6% and capped for AC segment up to 5 times and for LED lights segment, up to 6 times, of cumulative threshold investment in the previous financial year.
Being the scheme is limited in terms of number of application, time line and eligibility conditions, its utmost important to have adequate assistance and support to deliberate and accordingly prepare the application and apply to obtain the approval.
About the Speaker:
Vineet has over 16 years of consulting experience in leadership role in Indirect tax including GST (around 13 years in Big 4) and working with leading players in diverse industry sectors including white goods sector. He has conducted sessions on various indirect tax topics (including GST) at Client’s place, Business Parks, and other forums (ASCI, FTAPCCI, JICA, KOTRA, EPC, ICAI, ICFAI, JITO, RGA and others).
https://www.linkedin.com/in/d-vineet-suman-a5a28729
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