Simplifying the PLI Scheme for White Goods

October 12, 2023

The Production-Linked Incentive (PLI) scheme for white goods, which covers air conditioners and LED lights, has witnessed further improvements in response to suggestions from industry associations and beneficiaries. These changes are aimed at simplifying the scheme’s operation and improving the ease of doing business in India.

Key Changes in the PLI Scheme

The government has implemented several key changes to the PLI scheme, which are as follows:

Adoption of the Cost-Plus Method: The scheme now uses the cost-plus method instead of the Comparable Uncontrolled Price (CUP) method to calculate sales prices, especially in cases of captive consumption or supplies to group companies. This change also involved an alteration in the definition of ‘arm’s length.’
Eligibility of Tool Room Investments: Investments in tool rooms for manufacturing items like moulds and dies are now considered eligible investments under Capital Investment.
Extension for Establishing Manufacturing Facilities: Beneficiaries now have an additional year, beyond the previously allowed two years, to inform authorities about the establishment of a new manufacturing facility.
Revised Deadline for Claim Submission: The last date for submitting claims and requesting refunds of excess incentives due to discrepancies between statutory compliance and records provided at the time of filing claims has been revised.
Administrative Ministry Site Visits: Site visits by the administrative ministry have been introduced to ensure the scheme’s smooth operation.
Rollover of Bank Guarantees: Bank guarantees can now be rolled over as part of the scheme’s provisions.
Adjustments in Scheme Guidelines Annexures: Appropriate changes have been made to the annexures of the scheme guidelines.

Background of the PLI Scheme

The PLI scheme for white goods was approved by the Cabinet on April 7, 2021, with the aim of promoting ‘Atmanirbhar Bharat’ or self-reliant India. It was officially notified by the Department for Promotion of Industry and Internal Trade (DPIIT) on April 16, 2021. This scheme spans seven years, from FY22 to FY29, with a total outlay of Rs 6,238 crore. The scheme guidelines were published on June 4, 2021.

Progress and Impact

Stakeholder consultations have been crucial for the scheme’s successful implementation. Two corrigenda to the scheme guidelines were issued on August 16, 2021, and February 24, 2022, to ensure a smoother process. As of now, 15 out of the 64 selected beneficiaries who opted for the gestation period up to March 31, 2022, have commenced commercial production. The remaining beneficiaries, who chose a gestation period up to March 31, 2023, are in various stages of implementation.

Empowering India’s White Goods Industry

The PLI scheme for white goods is designed to establish a comprehensive component ecosystem for the air conditioner and LED lights industry in India. It aims to position India as an integral part of global supply chains. The DPIIT anticipates a substantial increase in domestic value addition, rising from the current 15-20% to 75-80%, thereby promoting self-reliance and strengthening India’s position in the global manufacturing landscape.

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