PLI for White Goods revised, FY 21 considered base year for sales

With an allocation of US$ 855 million, the PLI scheme will enhance competitiveness and manufacturing potential in the sector

August 18, 2021

Entities unable to raise requisite investment will refund the incentive till date along with compounded interest.

Pre-qualification criteria will now include audited financial records from 2020-21.

Net incremental sales will be calculated either with FY21 as the base year or through the net sales turnovers of products.

Tier-II and Tier-III markets contribute to 10-20% of white goods demands and are new target markets for sellers.

The Production Linked Incentive (PLI) scheme for the white goods sector has been revised by the Department for Promotion of Industry and Internal Trade (DPIIT). As per the FAQ document released by the Department, the following are some of the revisions made: 

  • In the event of an eligible company being unable to raise the required investment amount and deciding to withdraw from the scheme, the refund will consist of the incentive applicable till date and interest compounded annually.
  • The net incremental sales of products by the eligible entity will be computed either considering FY21 as the base year or the net sales turnover of products.  
  • LED commodities including transformers, fusers, and resistors are now eligible for coverage under the scheme. 
  • Audited financial records for the period of 2020-21 will be considered as part of the pre-qualification criteria. 

The addenda and modifications will look to increase competitiveness within the sector and enhance the manufacturing capabilities of the entities deemed eligible. The PLI scheme currently has an allocation of US$ 855 million (Rs 6,238 crores) which will be applicable over a five-year period. Experts project that the domestic Appliance and Consumer Electronics (ACE) industry will grow to US$ $21.18 billion by 2025, and that the LED market will contribute to 12% of the Compound annual growth rate (CAGR). 

The ACE industry is one of immense potential with the increase of internet penetration and smartphone/smart-device use. Tier-II and Tier-III markets constitute close to 10-20% of consumer durable sales, giving sellers more incentive to cater to these nascent markets. The government’s prioritisation of infrastructure development in the rural regions through the Gati Shakti Plan could help increase rural market penetration for sellers of white goods. Furthermore, it is imperative that entities understand the requirements of individual market demographics and customise their offerings accordingly. Responding to the need of the hour, it is also imperative that white goods be imbued with energy efficiency. 

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