The Union Cabinet on Wednesday approved production-linked incentive (PLI) schemes for white goods (air conditioners and LED lights) and high-efficiency solar photovoltaic (PV) modules with a total budgetary outlay of Rs 10,738 crore in a bid to boost domestic manufacturing.
While incentives worth Rs 6,238 crore would be provided over five years for manufacturing of white goods in India, the outlay for solar PV modules is Rs 4,500 crore.
“India’s growth story will be led by its flagship PLI scheme, boosting capability of local industry and job growth,” Commerce and Industry Minister Piyush Goyal said. “This means that minimum production in India as a result of PLI schemes is expected to be over $500 billion over the next five years.”
Last year, Finance Minister Nirmala Sitharaman had announced an outlay of Rs 1.97 trillion for PLI schemes for 13 key sectors, including technology, textile, automobile, and pharmaceuticals. Out of these, three schemes have already been notified, while six others have been approved by the Cabinet.
The development comes at a time when India is trying to diversify its supply chains amid tensions with China and the government’s persistent efforts to become self-reliant through various initiatives under Aatmanirbhar Bharat.
“The schemes have been specifically designed to boost domestic manufacturing in the sunrise and strategic sectors, curb cheaper imports and reduce import bills, improve cost competitiveness of domestically manufactured goods, and enhance domestic capacity and exports,” an official statement said.
PLI scheme for white goods
The scheme will offer an incentive of 4 to 6 per cent on incremental sales of goods manufactured in India for a period of five years to companies engaged in manufacturing of ACs and LED lights. In this case, 2019-20 will be treated as the base year.
It will result in incremental investment and production of Rs 7,920 crore and Rs 1.68 trillion, respectively, and exports worth Rs 64,400 crore. It is expected to create additional 400,000 direct and indirect employment opportunities.
According to the industry, the value addition for the AC industry will increase from current level of 20-25 per cent to 75 per cent. In the case of the LED lights industry, it will increase from 40 per cent to 70-75 per cent. “This would also result in starting manufacturing of components or sub-assemblies, which are not manufactured in India presently,” the statement said.
The department for promotion of industry and internal trade (DPIIT) and Invest India will also take steps to promote the scheme overseas by disseminating mailers to the embassies of India in home countries of global majors in ACs and LED lights industry.
“The scheme is expected to attract global investments, generate large-scale employment opportunities and enhance exports substantially. It will also lead to investments in innovation and research and development and upgrade of technology. A number of global and domestic companies, including a number of MSMEs, are likely to benefit from the scheme,” the statement said.
PLI for solar PV modules
The scheme is expected to add 10,000 MW capacity to integrated solar PV manufacturing plants and bring direct investment of around Rs 17,200 crore in such projects. It will also generate direct employment of about 30,000 and indirect employment of about 120,000. The scheme is expected to cut import dependence in a strategic sector like electricity, another statement said.
Manufacturers will be incentivised for higher efficiencies of solar PV modules and also for sourcing their material from the domestic market. Thus, the PLI scheme will help not only in setting up of domestic manufacturing capacities in upstream stages of solar PV manufacturing, like poly silicon and wafers, which are presently absent in the country, but is likely to augment the entire solar PV manufacturing ecosystem, including boost to ancillary units and MSMEs,” it said.