Indian Cabinet okays 2 PLI schemes |
Indian Prime Minister Narendra Modi led Cabinet of Union Ministers on 7th April approved two production linked incentive (PLI) schemes for air conditioners, LED lights, and solar modules worth 1.45 billion Dollars. PLI schemes, originally announced in 2020, seek to create global manufacturing champions in India by removing sectoral disabilities and creating economies of scale to develop complete component eco-systems in India. The Cabinet Secretariat stated that the selection of companies for the white goods PLI scheme will be done to incentivize manufacturing of components or sub-assemblies which are not manufactured in India presently in sufficient numbers and that mere assembly of finished goods will not be incentivized. It added that companies meeting the pre-qualification criteria for different target segments will be eligible to participate in the scheme. Incentives shall be open to companies making brownfield or greenfield Investments. Thresholds of cumulative incremental investment and incremental sales of manufactured goods over the base year would have to be met for claiming incentives. Over a period of five years, the PLI scheme for white goods is expected to lead to incremental production worth 22.9 billion dollars, exports worth 8.6 billion dollars with additional employment generation of more than 500,000 jobs. The scheme for white goods will extend an incentive of 4-6% on incremental sales over the base year (2019-20) for goods manufactured in India and covered under target segments to eligible companies. The announcement on the PLI scheme for ACs is encouraging as a lot of exciting developments in component design capability and growth of the SMEs can be expected in the foreseeable future. The PLI scheme for solar photovoltaic modules is expected to add 10,000 MW capacity of integrated solar PV manufacturing plants and bring direct investment of around 2.3 billion dollars, thus creating 30,000 direct employment. At present, India has a domestic manufacturing capacity of only 3 GW for solar cells and 15GW for solar modules. The scheme comes in the backdrop of India`s decision to impose 40% basic customs duty on solar modules and 25% on solar cells from 1 April 2022, a move that would make imports costlier and encourage local manufacturing.
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