Modi Govt Approved INR 10,738 Crores PLI Scheme For White Goods, Solar Modules

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Continuing with its effort to ramp up domestic manufacturing, the Cabinet on April 7, cleared two more production-linked incentive (PLI) schemes for air conditioners, LED lights, and solar modules with an outlay of ₹10,738 crores for five years. While the white goods segment (air conditioners and LED lights) is worth ₹6238 crores, the scheme is worth ₹4500 crores for high-efficiency solar PV modules. The development comes at a time when India is trying to diversify its supply chains amid tensions with China and the government’s persistent efforts to become self-reliant through various initiatives under Atmanirbhar Bharat.

The Cabinet secretariat in a statement said 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 with sufficient capacity and that mere assembly of finished goods will not be incentivized. Incentives shall be open to companies making brownfield or greenfield Investments.

Over a period of five years, the PLI scheme for white goods is expected to lead to incremental production worth ₹1.7 trillion, exports worth ₹64,400 crores with additional employment generation of more than 500,000 jobs. The scheme is also expected to generate revenue of ₹11,300 crores and ₹38,000 crores respectively through direct tax and GST over the five-year period. 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.

Piyush Goyal Twitter
Source – Piyush Goyal Twitter

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MD of Vikram Solar Gyanesh Chaudhary said, “This is a welcome move that reiterates the government’s intent supported with policy actions to enable an ‘Atmanirbhar Bharat’. The PLI scheme with an outlay of Rs. 4,500 crore for higher efficiency solar PV modules will boost domestic manufacturing, job-creation, attract investments and reduce solar imports. With this decisive step towards creating a self-sustaining ecosystem for solar equipment manufacturing in India, we are confident that India is well-poised to become the manufacturing hub for renewable energy technologies.

The PLI scheme for solar photo voltaic modules is expected to add 10,000 MW capacity of integrated solar PV manufacturing plants and bring direct investment of around Rs.17,200 crore, 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. The market for solar components is dominated by Chinese firms. India imported $2.16 billion worth of solar photovoltaic (PV) cells, panels, and modules in 2018-19.

Piyush Goyal said the seven PLI schemes already approved had received an encouraging response from investors. Scheme for electronic components and mobile manufacturing received 16 applications and ₹35,000 crores were already sanctioned. Similarly, pharmaceutical (raw materials) and manufacturing of medical devices received 47 and 14 applications, respectively.

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