Subsidy Scheme: Six Chinese firms among 42 qualify for white goods PLI

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November 04, 2021 5:00 AM

The scheme was expected to raise the level of domestic value addition in these segments from the current 15-20% to 75-80%.

The scheme was expected to raise the level of domestic value addition in these segments from the current 15-20% to 75-80%.The scheme was expected to raise the level of domestic value addition in these segments from the current 15-20% to 75-80%.

The government has selected 42 companies, including Daikin, Hitachi, Panasonic, Voltas, Mettube, Nidec, Dixon and Havells, that have committed investments of Rs 4,614 crore for availing of subsidy under the production-linked incentive (PLI) scheme for white goods.

Interestingly, six other applicants proposing foreign direct investment (FDI) from “countries sharing land border with India have been advised to submit approval for the FDI…for consideration of approval under the PLI scheme”, the department for the promotion of industry and internal trade (DPIIT) said on Wednesday.

To curb opportunistic acquisition of domestic firms in the wake of the pandemic, New Delhi had last year stipulated that FDI from the nations (including China) that share land borders with India will have to obtain government nod, subject to certain riders. Four applicants are being referred to a committee of experts for examination and its recommendations, the DPIIT said.

The government had received applications from 52 companies that had committed investment of Rs 5,858 crore under the PLI scheme.

Of the selected candidates, 26 companies have pledged investments of Rs 3,898 crore in component manufacturing for air-conditioners, while 16 will invest Rs 716 crore in making LED parts.

Some of the other investors are Amber Enterprises, Hindalco, Mettube India, Blue Star, Lucas-TVS, Sun Home Appliances and Haier Appliances (India).

The scheme will be implemented over a seven-year period, from FY22 to FY29 and has an outlay of Rs 6,238 crore. The government expects the scheme to lead to incremental production to exceed Rs 81,254 crore and create direct employment opportunities for 44,000 people.

Under the scheme, eligible investors in air-conditioners, LED lights and such components will get incentives of 4-6% on incremental sales (to be calculated over the base year of 2019-20) of products manufactured in India. The total incentives of Rs 6,238 crore will be disbursed over five years.

The PLI scheme was notified on April 16 and its guidelines were published on June 4. Interested investors had time up to September 15 to apply for the scheme.

The incentives will flow in from the next fiscal at 6% (if the investments start from FY22) and will be reduced to 5% by FY25 and then to 4% in FY27.
The scheme was expected to raise the level of domestic value addition in these segments from the current 15-20% to 75-80%.

The companies will produce components that are not currently manufactured in India. For ACs, several companies will be manufacturing compressors, copper tubing, aluminium stock for foils, display units, among others. Similarly, for LED lights, the applicants will invest in LED chip packaging, drivers, engines, light management systems, among others.

This is part of the 13 PLI schemes, announced by the government in the wake of the Covid-19 pandemic last year, to lure mainly large corporations to expand manufacturing, bolster supply chains and boost exports. The total incentives under the PLI schemes, covering sectors including telecom, electronics, auto part, pharma, chemical cells and textiles, were initially estimated at Rs 1.97 lakh crore over a five-year period. The schemes, put together, are expected to catalyse incremental manufacturing of as much as $520 billion over five years.

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