Production Linked Incentive (PLI) Scheme for White Goods

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Production Linked Incentive (PLI) Scheme for White Goods

The Department for Promotion of Industry and Internal Trade (DPIIT) has notified the Production Linked Incentive (PLI) scheme for white goods (air conditioners and LED lights), with a budgetary outlay of Rs 6,238 crore. 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.

Synopsis of Notification

As per the notification, the DPIIT announced that the PLI scheme for white goods will extend an incentive of 4-6 percent on incremental sales of goods manufactured in India for a period of five years to companies engaged in the manufacturing of air conditioners and LED lights. The period of five years will be calculated after the base year and one year of gestation period.

Target Segments

Support under the Production Linked Incentive (PLI) scheme will be provided to companies engaged in manufacturing of components of Air Conditioners and LED Lights in India:

Air Conditioners

  • Air Conditioners (Components- High-value Intermediates or Low-Value Intermediates or sub-assemblies or a combination thereof)
    • Large Investments
    • Normal Investments
  • High-Value Intermediates (Copper Tubes, Aluminium Foil and Compressors)
    • Large Investments § Normal Investments
  • Low-Value Intermediates (PCB assembly for controllers, BLDC motors, Service Valves and Cross Flow fans for AC and other components)
    • Large Investments
    • Normal Investments

LED Lights

LED Lighting Products (Core Components like LED Chip Packaging, Resisters, ICs, Fuses and large-scale investments in other components, etc.)

  • Large Investments
  • Normal Investments

Components of LED Lighting Products (like LED Chips, LED Drivers, LED Engines, Mechanicals, Packaging, Modules, Wire Wound Inductors, and other components)

  • Large Investments
  • Normal Investments

Quantum of Incentive

The PLI Scheme shall extend an incentive of 4% to 6% on incremental sales (net of taxes) over the base year of goods manufactured in India and covered under target segments, to eligible companies, for a period of five years after the base year and one year of gestation period.

  • The applicant will have to fulfill 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 PLI.
  • The first year of investment will be FY 2021-22 and the first year of incremental sale will be FY 2022-2023. The actual disbursement of PLI for a respective year will be after that year.
  • The Scheme is Fund Limited and even in case of achievement the total pay-out of incentives would be capped at the amount approved by Cabinet

Eligibility Criteria

  • The incentive under the Scheme shall be provided to Companies making brownfield or greenfield investments for manufacturing in target segments in India.
  • Eligibility of Companies will be subject to meeting the pre-qualification criteria for different target segments
  • One entity may apply for one target segment only. However, separate Group companies may apply for different target segments
  • Eligibility shall be subject to thresholds of cumulative incremental investment and incremental sales (net of taxes) of manufactured goods (as distinct from traded goods) over the base year for the respective year

Note:  Any entity availing benefits under any other PLI Scheme of the Government of India will not be eligible under this scheme for the same products.

Tenure of the Scheme

Support under the PLI Scheme shall be provided for a period of five years after the base year as defined and one year of the gestation period for fructifying investment to be implemented over FY 2021-2022 to FY 2028-2029.

Selection of Beneficiaries

Selection of companies for the Scheme shall be done to incentivize manufacturing of components or sub-assemblies which are not manufactured in India presently with sufficient capacity.

  • Companies investing in basic/core components shall have a higher priority.
  • 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 based on the response of the industry

Financial Outlay

As mentioned above, the PLI Scheme will be implemented within the overall financial limits of Rs. 6,238 Crores for implementation of the Scheme over a period of 5 years.

Application Fee

An application fee of Rs.100000 needs to be paid electronically to DGFT for applying the Production Linked Incentive (PLI) Scheme for White Goods. The details of bank account fee payment will be provided on the application portal.

Documents Required for PLIWG Application

The following documents are mandatory to apply for Production Linked Incentive (PLI) Scheme for White Goods

  • Certificate of Incorporation and Corporate Identification Number
  • Memorandum of Association
  • Article of Association
  • IEM/IL
  • MSME Registration Certificate
  • Importer Exporter Code (IEC) Registration Certificate
  • Audited Financial Statement of FY 2019-2020
  • Audited Balance Sheet and Profit and Loss Statement of FY2019-2020
  • Chartered Accountant Certificate for existing investment in plant and machinery (Gross Block) Net Sales Revenue and Net worth as on 31.03.2020
  • Shareholder Structure
  • Top 10 Shareholders list as on 31.03.2020
  • Resolution from Board of Directors
  • Letter authorizing the signing authority
  • Technology Transfer Agreement
  • Detailed Manufacturing Process note
  • Detailed Manufacturing Flow Chart with inputs required in each stage in the process flow chart and the output at each stage of Manufacturing
  • Other Business Agreement

Application Procedure for PLI Scheme for White Goods

The application window for the scheme shall be open for a period from 15th June 2021 to 15th September 2021 on the official website of the PLI Scheme for White Goods.

The prescribed application form for PLI Scheme for White Goods is as follows:

Guidelines-for-the-PLI-Scheme04062021-23-28

Note: Application may also be invited anytime during the tenure of scheme for any particular segment

  • One entity may apply for one category under one target segment only. However, separate Group companies may apply for different target segments.
  • The applicant needs to declare the following details on the application for statically purposes :
    • Yearly plan Details
    • Domestic Value Addition
    • Employment Generation
    • Exports during the tenure of the scheme
  • Upon successful submission of an application, an acknowledgment with a unique Application ID number shall be communicated to the applicant over email as well as through SMS. This acknowledgment shall be constructed as approval under the scheme.
  • In case an application is submitted on the last day of the application window, the PMA shall inform the about the deficiency in the application to the applicant within 15 days of submission. After that applicant needs to submit the application completed in all respect by the last day of the month following the date of application window closure. The acknowledgment will thereafter be issued by the PMA.
  • The net incremental sales of the eligible products manufactured in the  Financial year following the investment period opted by the applicant shall be considered for incentive.

Application Processing

  • The PMA will process the applications and make appropriate recommendations for approvals under the scheme to DPIIT.
  • Applicants are recommended by PMA shall be considered for approval by DPIIT. The selection of applicants will be finalized within 60 days from the date of closure of the application window.
  • Selected applicants need to submit a bank guarantee along with undertakings of an amount equivalent to 0.5% of the committed investment in favor of DPIIT valid for 18 months from the date of the proposed date of commercial production.
  • The bank guarantee will be invoked if the actual commercial production is not achieved within 1 year of the originally proposed date of commercial production.

Disbursement of Incentives

For calming incentives under the PLI scheme, applicants shall be required to submit claims for disbursement of incentives to the PMA online. The prescribed application form claiming Incentives under Production Linked Incentive (PLI) Scheme for White Goods is attached here for reference:

Guidelines-for-the-PLI-Scheme04062021-37 (1)

Actual disbursement of PLI for a respective year will be subsequent to that year. An applicant shall submit a claim for disbursement of incentive on annual basis for the sales made in a financial year along with its audited financial statements.

Claim for disbursement of incentive shall be filled by the applicant latest by 31st October in the following financial year to which the claim pertains.

The PMA shall process the claim for disbursement of incentive within 45 days from the date of receipt of such claim along with all supporting documents and make appropriate recommendations to DPIIT.

Upon approval of claims by DPIIT, the disbursement of incentive will be done by way of Direct Bank Transfer through PFMS.

Post by Renu Suresh

Renu is experience content writer specialised in compliances and company rules.