Around 52 companies have applied for availing production-linked incentives (PLIs) for white goods makers, proposing an investment of around Rs 6,000 crore in the manufacturing of components for air conditioners and LED lights.
Most of the investments are expected to happen in the next two-three years; and after that, local production for components for AC and LED light is expected to start, said FICCI Electronics Manufacturing Committee Chairperson Manish Sharma.
This will not only help in saving the foreign currency, as the majority of the components in AC and LED lights are imported from countries as China and Taiwan, but also create job opportunities in the country.
Wednesday was the deadline for the industry to submit applications for the PLI scheme for white goods (air conditioners and LED lights).
“It is encouraging to see the industry response to the PLI scheme for component manufacturing in AC and LED.
“From the applications received, it seems that the industry stands to get an investment of nearly Rs 6,000 crore of which nearly Rs 5,000 crore is towards AC and Rs 1,000 crore towards LED,” Sharma, who is president and CEO of Panasonic India & South Asia, told PTI.
Sharma was involved in the process as part of his role in the industry body FICCI.
Fifty-two companies have applied in these two categories so far, in which 32 are for manufacturing of components and the rest 20 are for LED light components, he added.
“Participation of 52 companies, in this exercise matters a lot, which means that execution of this investment will diversify the components industry for both across high, medium and small intermediaries,” said Sharma.
The timelines are such that the majority of the investments will happen in the next two to three years.
“This means that average domestic value addition for AC, which is around 20-25 per cent with local components of the product, will go up to 75 per cent in the next five years,” he said.
This would save the cost and time of the industry from sourcing the components.
“As component manufacturing is a key beneficiary of the new policy, indigenous AC manufacturing will get a fillip. This will also enable design-led manufacturing, fuel innovation and drive component exports along with finished ACs from India.
“In the foreseeable future, I see a lot of exciting developments in component design capability and growth of the MSMEs (micro, small and medium enterprises) and SMEs,” he said.
Sharma said that last year, the Indian AC market was pegged at around 7.5 million. “Of this, 2.5 million were imports which have come down significantly due to ban on import of gas-filled ACs.” “I expect the market to touch nine million this year; and of this, 8-8.5 million will be manufactured locally,” Sharma added.
Under the PLI scheme for white goods (air conditioners and LED lights), the government has approved a budgetary outlay of Rs 6,238 crore. This will be implemented over FY 2021-22 to FY 2028-29.
In air conditioners, support would be provided for AC components as copper tubes, aluminium foil and compressors. It will also provide incentives for low-value intermediates such as PCB assembly for controllers, BLDC motors, service valves and cross-flow fans for AC and other components.
While for LED lighting products, it is for core components like LED chip packaging, resistors, ICs, fuses and large-scale investments in other components.
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