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Home / Business / Government announces incentive of 4-6 per cent to AC and LED lights manufacturers

Government announces incentive of 4-6 per cent to AC and LED lights manufacturers

The first year of investment will be 2021-22 and the first year of incremental sale will be 2022-23
Cumulative incremental investment in plant and machinery and incremental sales over the base year in that respective year.

Our Special Correspondent   |   New Delhi   |   Published 18.04.21, 12:12 AM

The government has notified an incentive of 4-6 per cent under the production linked incentive scheme for air conditioners and LED lights for a period of five years.

The selection of companies for the incentives would be done to support manufacturing of components which are not made in India at present.

The applicant will have to fulfil 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 the PLI scheme.

The first year of investment will be 2021-22 and the first year of incremental sale will be 2022-23.

Actual disbursement of PLI for a particular year will be subsequent to that year, the notification by the department for promotion of industry and internal trade said.

Mere assembly of finished goods would not be incentivised and companies investing in basic/core components would get a higher priority.

The Empowered Group of Secretaries chaired by the cabinet secretary will monitor the PLI scheme, undertake a periodic review of the outgo under the scheme, ensure uniformity of all PLIs and take appropriate action to ensure that the expenditure is within the prescribed outlay.

The group will be empowered to make any changes in the modalities of the scheme within the overall financial outlay of Rs 6,238 crore.

The incentive per beneficiary will be applicable on incremental sales (net of taxes) of manufactured goods (as distinct from traded goods) over the base year (2019-20) subject to ceilings.

“Mere assembly of finished goods shall not be incentivised. Selection of companies for the scheme shall be done so as to incentivise manufacturing of components or subassemblies which are not manufactured in India with sufficient capacity,” it said.

Support under the scheme will be provided to companies/entities engaged in manufacturing of components of ACs (copper tubes, aluminium foil and compressors) and LED lights (LED chip packaging, resisters, ICs, and fuses).

Enlisting the eligibility criteria to avail of the benefits under the PLI scheme, the notification said incentives would be provided to companies making brownfield (existing facility) or greenfield (new) investments for the manufacturing.

“One entity may apply for one target segment only. However, separate group companies may apply for different target segments. Further, sales by entities to their group companies should be at an arm’s length price as those to outside group companies,” it added.

The scheme proposes a financial incentive to boost domestic manufacturing and attract large investments in the white goods manufacturing value chain.

The PLI scheme for White Goods (PLIWG) proposes a financial incentive to boost domestic manufacturing and attract large investments in the White Goods manufacturing value chain. Its prime objectives include removing sectoral disabilities, creating economies of scale, enhancing exports, creating a robust component ecosystem and employment generation.

Companies investing in basic/core components shall have a higher priority. Also, within a target segment, ‘large investment’ shall have a higher priority over ‘normal investment’. The actual number of beneficiaries within a target segment shall be decided on the basis of the response of the industry.

Companies meeting the prequalification criteria for different target segments will be eligible to participate in the Scheme. Incentives shall be open to companies making brown field or green field Investments. Thresholds of cumulative incremental investment and incremental sales of manufactured goods over the base year would have to be met for claiming incentives.

An entity availing themselves of the benefits under any other PLI Scheme of the Centre will not be eligible under this scheme for the same products but the entity may take benefits under other applicable schemes of the Union government or schemes of state governments.

According to the government, it is estimated that over the period of five years, the PLI scheme will lead to incremental investment of Rs 7,920 crore, incremental production worth Rs 1.68 lakh crore, exports worth Rs 64,400 crore, earn direct and indirect revenues of Rs 49,300 crore and create additional four lakh direct and indirect employment opportunities.

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