The Central government has received investment proposals worth ₹5,866 crore to avail benefits under the PLI scheme for AC and LED light components from 52 companies. The key players that have submitted applications for manufacturing of critical components under the scheme include Daikin, Hindalco, Dixon, Amber Enterprises, Voltas, Panasonic, Hitachi, Blue Star, Havells, TVS-Lucas, Dixon and Syska.

“The response has exceeded expectations. There are enough funds to give incentives to all the 52 companies if they meet the eligibility conditions. In case in a year, a particular company that has been selected does not meet its target, it will not get incentive for that year,” an official aware of the intricacies told BusinessLine .

Of the applications received, about 31 companies have submitted investment proposals for AC components worth ₹4,995 crore, while 21 companies with investment proposals of over ₹891 crore have submitted applications for making LED lights components.

“Items, with low gestation period, manufactured under the scheme, may be rolled-out as early as next year,” the official said adding that the selected companies will get one year’s gestation period to start production and will be eligible for incentives from the following year. “Some companies have also shared plans of exporting to neighbouring countries,” he said.

Approval expected soon

Most of the companies are expected to invest in the first two-three years and that the approval letters are likely to be issued before November 15, as per the DPIIT (Department for Promotion of Industry and Internal Trade), which is the nodal department for implementing the scheme.

In April, the Centre had announced ₹6,238 crore-PLI scheme to be implemented over FY22 to FY29 for AC and LED lights components.

Officials said that going by the proposals made by the companies, it is expected that over the next five years, about 12 million compressors will be produced in the country. A compressor is the most critical component in air-conditioners and the AC-makers at present heavily rely on imports of compressors, since only about 1.2 million compressors are being manufactured in the country.

Proposals have also been received for other components such as copper tubing, aluminium stock for foils, control assemblies for indoor units or outdoor units among others. In LED lights space, the scheme is expected to give a boost for manufacturing of components such as LED chip packaging, LED drivers, LED engines, LED light management systems, PCBs among others.

Manish Sharma, Chair of FICCI Electronics & Manufacturing Committee, said, “Currently, only about 25-35 per cent of local value additions is done in ACs and there is potential for this to increase to 75-80 per cent in the next 3-5 years. Last year, the Indian AC market was pegged at around 7.5 million units. Of this 2.5 million units were imports which has come down significantly due to the ban on import of gas-filled ACs. I expect the market to touch 9 million units this year and of this, 8-8.5 million units will be manufactured locally.”

Investment proposals

Sharma, who is the President and CEO at Panasonic India & SA, said that the company has made an application with an investment proposal of ₹300 crore for compressors and other components.

B Thiagarajan, Managing Director, Blue Star said that the company has submitted an application with an investment proposal of ₹156 crore for components such as heat exchangers and sheet metal parts in the low value intermediaries segment as part of the backward integration.

Japanese major Daikin, which is one of the players with a significant investment proposal, has been looking at options for setting up of its third-manufacturing facility, sources said.

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