Most of the air conditioner manufacturers are not impressed by the government’s Production Linked Incentive (PLI) scheme announced for the air conditioning industry. Most of them, therefore may not go for the scheme for which the guidelines were issued last week.
According to the AC manufacturers, the PLI Scheme in RAC category is more focused towards components manufacturing while the industry wants the government to give some incentive for finished goods category. “The government should have given some incentive for finished goods category as well,” said an AC manufacturer on the condition of anonymity.
Manufacturers’ disappointment over the scheme originates from the fact that manufacturing of key components of RACs such as compressors and electronics controllers is highly technical in nature and hence it is likely to see continued sourcing from outside India. These two critical components form 40% of the total cost for RAC. Setting up of manufacturing plants in India by overseas component suppliers will also be beneficial for the RAC industry in terms of components sourcing.
According to them, most AC manufacturers will not go for compressor and controller manufacturing under the PLI scheme due to its high complexity and capital-intensive nature.
The PLI scheme for air conditioners and LED bulbs aims to reduce import dependence over medium term and has a budgetary outlay of Rs. 6,238 crore which will be implemented over FY22 to FY29. 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 brown field or green field Investments. Thresholds of cumulative incremental investment and incremental sales of manufactured goods over the base year would have to be met for claiming incentives.