New Delhi: Air conditioner manufacturers have welcomed the government’s production linked incentive (PLI) scheme for the sector saying the move will help in local value addition take a quantum jump to 75 per cent in the next three years from the current 25 per cent.
The government on Wednesday approved a PLI scheme for white goods – Air Conditioners and LED Lights – with a budgetary outlay of Rs 6,238 crore, under which incentive of 4 to 6 per cent on incremental sales of goods manufactured in India for a period of five years was announced for companies engaged in manufacturing of these two items.
Reacting to the announcement, Consumer Electronics and Appliances Manufacturers Association (CEAMA) President Kamal Nandi said it is a step towards making India self-reliant in a category that has exponential growth potential.
Nandi, who is also the Business Head & Executive Vice President of Godrej Appliances, further said, the scheme will bring the entire value chain on-shore and enable India to play a more significant role globally, while creating employment opportunities locally.
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Expressing similar views, Panasonic India & South Asia President & CEO Manish Sharma said,”Currently ACs come with 25 per cent local value addition and with the current PLI scheme, this can go up to 75 per cent in next 3 years.”
Last year, he said, the Indian AC market was pegged at around 7.5 million units annually, and of this 2.5 million were imports which has come down significantly due to ban on import of gas-filled ACs.
“I expect the market to touch 9 million this year and of this 8-8.5 million will be manufactured locally,” Sharma added.
Expressing similar sentiments, Amber Enterprises Chairman & CEO Jasbir Singh said since the last 20 years the AC industry has travelled a journey from few thousand units to 7 million but unfortunately component ecosystem did not get developed.
“Today we continue to import critical components like compressors, aluminium, copper tubes, motors, PCB, valves in majority. PLI on AC components is the right step at right time,” he said adding it would not only attract huge investments and generate employment but also fulfil the objective of self-reliant India initiative of the government.
“We have earmarked Rs 250-300 crore investment for participating in AC PLI,” Singh said.
Nandi, however, said that for a holistic growth of the sector, the finished goods should also be considered for incentivising, in addition to its components, under the PLI scheme.
Further, he said, given the low penetration of this category, the domestic demand also needs to be boosted by making ACs more affordable, and that could be facilitated through reducing the GST from 28 per cent to 18 per cent.
“This will provide the highly desired scalability to the AC production, in turn, will enhance the sector’s competitiveness,” he added.
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