Re-opening of white goods PLI scheme likely to see muted response

Government’s re-opening of the production linked incentive ( PLI) scheme for white goods such as AC and LED lights is likely to see muted response as several large manufacturers are not going to file fresh investment proposals under it, industry executives said. This third round was opened on July 15 and will close on October 12 to attract additional investment for production of components.

Chief executives of five large manufacturers, who are exiting beneficiaries of this PLI scheme, said the tenure of the scheme for availing incentives remains same till 2028-29 for the third round applicants as those in the earlier two rounds, which does not make it worthwhile since it takes almost two years to start a factory after approval.

Also, the third round has also not changed the clause for PLI applications that a single company may apply for any one category. The chief executives said to make a fresh investment commitment, they need to change their corporate structure which makes no sense since most of the technological collaborations are already with the existing entity.

“We are not going ahead with the third round PLI application since it says only one entity can apply for anyone category under one target scheme. Separate group companies may apply for different target schemes. It makes no sense for us,” said the chief of one of the largest manufacturers.

Industry body, Refrigeration and Airconditioning Manufacturers Association president KJ Jawa said the industry has reached out to the government to extend the application period by two more months and the incentive period for the PLI scheme for the third round applicants by two more years.

“The PLI scheme for white goods can be as big as for the mobile industry. But some flexibility is required,” said Jawa, who is also the managing director at Daikin India.

Blue Star managing director B Thiagarajan said the company is still evaluating whether to apply or not since it has plans for some more backward integration. The company is already a beneficiary of the scheme.

“If we have to apply, we may have to advance our investment plan by one year. It will be worthwhile if we can achieve the revenue required to claim the PLI incentive. That will be the main criteria to decide since any investment should be based on business sense instead of struggling to reach the revenue,” he said.

The PLI for white goods was cleared for 66 companies with committed investment of Rs 6,962 crore. The government reopened the third round of the scheme and allowed both new and existing beneficiaries to apply. It said companies approved in this round will be eligible for PLI for a maximum of three years in the case of new applicants and existing beneficiaries for 2-3 years.

Only manufacturing of components and sub-assemblies are incentivized under the scheme as the government aims to increase domestic value addition to 75-80% at the end of the scheme. As per industry executives, the industry has already achieved 55-60% value addition.

Global companies like Daikin, LG, Mitsubishi, Panasonic, Hitachi and have committed to invest Rs 2,090 crore in the scheme apart from domestic biggies such as Voltas, Blue Star, Dixon, Amber and Havells.