Reasons to Invest

PLI Scheme with an outlay of INR 6,238 crores ($851 mn) for white goods (Air Conditioners and LED Lights)
Demand growth is likely to accelerate with rising disposable incomes and easy access to credit.
Government initiatives on power, housing and Smart Cities are expected to increase demand substantially in the next 2-5 years as there is substantive room for growth given the current penetration rates of white good appliances in Indian households

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Budget 2021-2022 Announcements

Tariff rate on all goods falling under sub-heading 8414 40 (Air compressors mounted on a wheeled chassis for towing) and 8414 80 (Others) is being increased to 15% (from 7.5%) while the effective BCD on all goods under these sub-headings, except for tariff item 8414 80 11 (Gas compressors of a kind used in air-conditioning equipment), is being retained at 7.5%. BCD on compressors of Refrigerators falling under tariff item 8414 30 00 (Compressors of a kind used in refrigerating equipment) and compressors of Air Conditioners falling under tariff item 8414 80 11 (Gas compressors of a kind used in air-conditioning equipment), is being increased from 12.5% to 15% by increasing the tariff rate. By virtue of declaration under the Provisional Collection of Taxes Act, 1931, this increase will come into force with immediate effect. Tariff rate on all goods falling under sub-heading 8501 10 (Electric Motors & Generators; Motors of an output not exceeding 37.5 W: DC motor) to 8501 53 ( Electric Motors & Generators ;Of an output exceeding 75 kW) is being increased from 10% to 15% while the effective BCD on all goods under these sub-headings (8501 10 to 8501 53), is being retained at 10%. Consequently, goods falling under sub-headings 8501 10 to 8501 53 will attract the effective BCD rate of 10%.

Government Support

Central Government Schemes
  • Production Linked Incentive scheme
  • Duty Drawback Scheme
  • Export Promotion Capital Goods scheme
State Incentives

Incentives by the state usually include:

  • Capital subsidy
  • Stamp duty exemption
  • Interest subsidy
  • Tax reimbursement
  • Electrical duty exemption  
Empowered Group of Secretaries (EGos) and Project Development Cells (PDCs)

The PDCs would be responsible for coming up with projects with all approvals and identifying issues to attract investment that would be brought to the attention of the EGoS.

Productive Linked Incentive Scheme for White Goods

The PLI Scheme for White Goods is aimed to boost domestic manufacturing of components and sub-assemblies of ACs and LED Lights and make India globally competitive by removing sectoral disabilities, creating economies of scale and ensuring efficiencies. The Scheme was approved by the Government of India in April 2021 and has an outlay of USD 855 Mn.

42 companies have been selected under the PLI Scheme. 26 companies have committed to invest USD 510 Mn for Air Conditioner Components and 16 Companies to invest USD 93 Mn for LED Component Manufacturing. Expected net incremental production is more than USD 10.6 Bn. As on April 2022, the Government has reopened the application window for the PLI Scheme till 25 April, 2022.

UJALA Scheme

Under the UJALA (Unnat Jyoti by Affordable LEDs and Appliance for All) Scheme, the Government distributed more than 366 million LEDs to households from year 2015 to 2022 at 40% of the market price. The Scheme aimed to promote energy-efficient lighting. As of January 2022, 48 billion kWh per annum energy has been saved and 3.86 billion tonnes of reduction in CO2 emission has been achieved.

SLNP Scheme

The Street Lighting National Programme (SLNP) aims to install/retrofit around 30 million LED street lights by 2024 out of which 11 million LED street lights have been installed as of January 2022, resulting in annual energy saving of around 7.6 billion KWh and annual estimated greenhouse gas emission reduction of around 5.29 million tonnes of carbon dioxide.

Trade Scenario

India’s Exports for Refrigerators, Air Conditioners, LEDs and Washing Machines amounted to USD 571 Mn in FY21
India’s biggest Export destinations in White Goods are United Arab Emirates, Sri Lanka, and the United States.
India’s Imports for Refrigerators, Air Conditioners, LEDs and Washing Machines amounted to USD 1.74 Bn in FY21
India Imports White Goods primarily from China, Thailand, and Vietnam in the sector.

Major Investors

Infrastructure Map

Product Profiles

Indian residential AC market is estimated to be around 7 to 7.5 million units per annum by volume. The organized sector dominates the industry in terms of sales value and volume, employment generation and investments.
In 2020, urban households constituted 70% share of the demand for ACs from the residential sector. Adoption of latest technologies has led to the introduction of new innovative models in the market such as ACs fitted with copper condenser and blue fin, ubiquitous sensor and Wi-Fi enabled smart features.
Constantly rising temperatures in northern regions of India has made Air Conditioners an increasingly important fixture in homes boosting their sales. Currently, ACs have a penetration of just 4% compared to global average of 30% signifying the huge potential for growth

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FAQ

FAQs

What are White goods?

White goods are major household appliances and may include air conditioner, dishwasher, clothes dryer, drying cabinet, freezer, refrigerator, kitchen stove, water heater, washing machine, , microwave ovens and induction cookers.

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Who can be an Applicant under the Production Linked Incentive Scheme for White Goods (PLI-WG Scheme)?

Any company incorporated in India and as defined in the Companies Act 2013, proposing to manufacture one or more eligible product(s) under the specified target segment.

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Whether an applicant can apply for more than one Target Segments and Eligible Products?

One entity may apply for any one category under one target segment only. However, separate Group companies may apply for different target segments.

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Whether a beneficiary under other PLI Scheme of Government of India can avail benefits for the same products under the PLI-WG scheme?

No. Such applicants shall not be eligible under the PLI-WG scheme. However, the applicant can continue to avail incentives under other Central/ State schemes.

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What are the investment categories under each target segment?

An applicant can apply under any one of the following investment categories for anyone target segment:

  1. Large Investment
  2. Normal Investment

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