Thursday, 8 April 2021
The newly introduced production-linked incentive (PLI) scheme for air conditioners (ACs) may have long-term potential to boost the local component ecosystem. But the scheme has failed to impress local manufacturers who assemble finished units.
Since last April, the Cabinet, headed by Prime Minister Narendra Modi, has approved PLI for five other sectors. But unlike the previous ones, the latest scheme focuses solely on growing component manufacturing. The manufacturers will receive 4-6 per cent incentive on incremental production, only if they add value by growing component production.
“The selection of companies for the scheme shall be done, so as to incentivise manufacturing of components or sub-assemblies which are not manufactured in India presently with sufficient capacity. Mere assembly of finished goods shall not be incentivised,” said the government in a statement.
Leading consumer durables manufacturers said it will help in growing the local AC manufacturing base and make India more competitive in the global market. The absence of incentives for incremental assembly will lead to the deferment of investments by local players in building capacity for finished ACs.