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The Ministry of Commerce and Industry had approved the Product Linked Incentive (PLI) Scheme for White Goods (Air Conditioners and LED Lights) vide Notification dated 16 April 2021. In respect thereto, a detailed guideline has been issued for smooth and effective operation of the PLI Scheme for domestic manufacturers of White Goods. The key guidelines have been summarised hereunder:
Application and Approval
The application window for the PLI Scheme shall be open online at the portal from 15 June 2021 to 15 September 2021. The PLI Scheme shall be implemented through a Project Management Agency (PMA) under the instruction of the Department of Promotion of Industry and Internal Trade (DPIIT). The Applicants application will be processed by a PMA and on receiving approval, a Bank Guarantee for an amount equivalent to 0.5% of the committed investment shall be submitted in the proper format. The BG will be valid for 18 months.
The Applicants shall fulfil both the criterions of cumulative incremental investment in plant and machinery as well as incremental sales over the base year in that respective year to be eligible for PLI. Investment under the guidelines shall include investment on plant, machinery, equipment and associated utilities (as specified in the guidelines) and shall be used in the regular course of manufacturing of the eligible products under target segments. The plant machinery equipment shall be purchased or leased. Expense incurred in respect to the plant, machinery and equipment’s shall also be considered.
Investment in Research and Development (R&D) shall also be considered as investment if the investment is under capital investment on R&D and product development. The revenue expenditure shall be excluded from ambit of investment. However, it shall be noted that the investment in R&D shall not exceed 15% of the total committed investment.
Incentive under the PLI shall be provided to Companies making brown field or green field Investments for manufacturing in target segments in India. The Scheme is applicable to the Applicants who process the raw materials or inputs and its results emerges into a new product. Mere, value addition to the Scheme shall not be eligible for the scheme benefit.
The eligibility shall be subject to thresholds of cumulative incremental investment and incremental sales of manufactured goods (as distinct from traded goods) over the base year for the respective year. The category of investment to be considered under each target scheme will be Large as well as normal investment. The Applicants must meet all the threshold conditions to be eligible for disbursement of incentive as detailed under Appendix A to the detailed guidelines. Further, Any entity availing benefits under any other PLI Scheme will not be eligible under this scheme for same products but the entity may take benefits under other applicable schemes.
This PLI Scheme shall extend an incentive of 4% to 6% on incremental sales (net of taxes) over the base year of goods manufactured in India and covered under target segments, to eligible companies, for a period of 5 years subsequent to the base year (i.e., F.Y. 2019-20) and one year of gestation period. The incentive calculation will be capped on the basis of the net increment sale of the products up to 5 times for Air Conditioners and 6 times LED Lights, of the cumulative threshold investment in the previous financial year. The first year of investment will be FY 2021-22 and the first year of incremental sale will be FY 2022-23.
This Scheme shall be provided for a period of 5 years (i.e., F.Y. 2021-22 to F.Y. 2028-29) subsequent to the base year i.e., F.Y. 2019-20 and one year of gestation period for fructifying investment to be implemented over FY 2021-22 to FY 2028-29. Further, F.Y. 2019-20 shall be treated as base year for computation of cumulative incremental investment and net incremental sales of eligible products as well as financial attributes under pre-qualification criteria.
The Application for claiming the disbursement of the claim shall be submitted along with requisite document in the formats given in the guidelines through PMA online. Claim for disbursement shall be filed by the Applicants latest by 31 October in the following F.Y. to which the claim pertains. Actual disbursement of the claim under the PLI Scheme for a respective year will be subsequent to that year. Upon appropriate recommendations with DPIIT, the PMA will be processing the claim for the disbursement within 45 days from the date of receipt of the claim.
The information provided in this update is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned hereinrra quis.
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