This will help in saving foreign exchange, as most of the components of AC and LED lights are imported from countries like China and Taiwan.
Around 52 companies have applied for availing production incentives (PLI) for white goods manufacturers, proposes to invest around Rs 6,000 crore in 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 lights is expected to start, said Manish Sharma, chairman, FICCI electronics manufacturing committee.
This will not only help in saving foreign exchange, as most of the components in AC and LED lights are imported from countries like China and Taiwan, but also create employment opportunities in the country. Wednesday was the deadline for industry to submit applications for the PLI scheme for white goods (air conditioners and LED lights).
“It is encouraging to see the response of the industry to the PLI scheme for component manufacturing in AC and LED.
Mr. Sharma, President and CEO, Panasonic India said, “From the applications received, it appears that the industry will receive an investment of around ₹6,000 crore, of which around ₹5,000 crore is towards ACs and ₹1,000 crore towards LEDs.” and South Asia, told PTI.
Mr Sharma was involved in the process as part of his role at industry body FICCI.
He said that so far 52 companies have applied in these two categories, in which 32 are for manufacturing of components and the remaining 20 are for LED light components.
“The participation of 52 companies in this exercise means a lot, which means that the execution of this investment will diversify the component industry for both high, medium and small intermediaries,” Mr. Sharma said.
The time frame is such that most of the investment will be in the next two to three years.
“This means that the average household value addition for ACs, which is around 20-25% with local components of the product, will increase to 75% over the next five years,” he said.
This will save industry cost and time sourcing components.
“As component manufacturing is a major beneficiary of the new policy, indigenous AC manufacturing will get a boost. It will also enable design-based manufacturing, fuel innovation and drive component exports along with ready-made ACs from India.
“In the near future, I see a lot of exciting developments in component design capability and growth of MSMEs (Micro, Small and Medium Enterprises) and SMEs,” he said.
Mr. Sharma said that the Indian AC market last year was around 75 lakhs. Out 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 reach 90 lakh this year and 8.85 lakh of this will be manufactured locally,” he said.
Under the PLI scheme for white goods (air conditioners and LED lights), the government has approved a budgetary outlay of Rs 6,238 crore. It will be implemented from FY 2021-22 to FY 2028-29.
Support for AC components like copper tubes, aluminum foils and compressors will be provided in the air conditioner. It will also provide incentives for low-value intermediates such as PCB assemblies for controllers, BLDC motors, service valves and cross-flow fans for AC and other components.
Whereas for LED lighting products, it is for core components such as LED chip packaging, resistors, ICs, fuses and other components with massive investment.
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