PLI Scheme for White Goods
Context: The Ministry of Commerce and Industry recently announced the re-opening of the application window for the Production-Linked Incentive (PLI) Scheme for White Goods (Air Conditioners and LED Lights).
What is the PLI Scheme for White Goods?
The Production-Linked Incentive (PLI) Scheme for White Goods is a central government initiative designed to boost domestic manufacturing and attract large investments in the air conditioner and LED light industries. The scheme provides financial incentives to companies based on their incremental sales of goods manufactured in India.
- Objective: To make India self-reliant (Atmanirbhar) by creating a complete component ecosystem for these sectors, enhancing domestic value addition, and generating employment.
- Tenure: The scheme was approved by the Union Cabinet in April 2021 and is being implemented over a seven-year period, from Fiscal Year (FY) 2021-22 to FY 2028-29.
- Financial Outlay: The total outlay for the scheme is ~₹6,000 crore.
- Incentive Mechanism: Incentives are paid annually to selected manufacturers for a period of five years (FY 2022-23 to FY 2026-27) on the incremental sale of eligible products over the base year (FY 2020-21).
- Current Status: Applicants with a committed investment of ~₹10,000 crore demonstrate strong industry appetite.
Eligible Products
The scheme specifically targets the manufacturing of components and sub-assemblies, not just finished goods. The eligible products are categorised as follows:
What is the significance of the scheme?
The PLI Scheme for White Goods holds immense strategic and economic significance for India:
- Reducing Import Dependence: Prior to the scheme, India heavily imported critical components like compressors for ACs and LED chips. The scheme incentivises the manufacture of these “not manufactured in India” components, reducing import bills and strengthening the supply chain against global disruptions.
- Creating a Complete Domestic Ecosystem: It aims to build an end-to-end value chain within India, moving beyond mere assembly to high-value manufacturing. This fosters innovation and deepens the industrial base.
- Enhancing Global Competitiveness: By providing financial incentives, the scheme makes Indian manufacturing cost-competitive. This attracts global champions to set up shops in India and helps domestic companies scale up, integrating India into the global supply chains for white goods.
- Generating Large-Scale Employment: The establishment of new manufacturing units and the expansion of existing ones create significant direct and indirect employment opportunities, both for skilled and unskilled labour.
- Consumer Benefit and Energy Efficiency: Promoting domestic manufacturing of efficient components like BLDC motors and LED drivers leads to the availability of more energy-efficient products in the market, saving energy costs for consumers and supporting India’s climate goals.
