The Central government has formally notified the ₹ 6,238 crore- Production Linked Incentive (PLI) Scheme for component makers in the air-conditioners and LED lights segments.

In the AC segment, incentives under the scheme will be provided to companies manufacturing various components which include compressors, copper tubes, aluminium foil, PCB assembly of controllers, BLCD motors, service valves and cross flow fans besides sub-assemblies.

In the LED lights segment, companies making components such as LED Chip Packaging, LED Chips, LED Drivers, LED Engines, packaging, modules, Resisters, ICs, Fuses, wire wound inductors among others, will be eligible to avail benefits under the scheme.

“The PLI Scheme shall extend an incentive of 4 per cent to 6 per cent 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 five years, subsequent to the base year and one year of gestation period,” the notification stated.

The companies will have to fulfill both the criteria of cumulative incremental investments in plant and machinery as well as annual incremental sales over the base year to be eligible for the benefits, it added.

Investment categories

The investments have been categorised under “normal investments” and “large investments”. Minimum cumulative incremental investments and minimum incremental sales targets per year vary depending on the category of components. The first year of investment will be FY 2021-22 and the first year of incremental sale will be FY 2022-23, the notification stated.

It added that incentives under the scheme will be given to companies making brownfield or greenfield investments for manufacturing in these target segments in the country.

“Mere assembly of finished goods shall not be incentivized. Selection of companies for the Scheme shall be done so as to incentivize manufacturing of components or sub-assemblies which are not manufactured in India presently with sufficient capacity. Companies investing in basic/core components shall have a higher priority. Within a target segment, ‘Large Investment’ shall have a higher priority over ‘Normal Investment’,” the notification added. Comprehensive guidelines for the scheme will be released soon by the government.

“One entity may apply for one target segment only. However, separate group companies may apply for different target segments. Further, sales by entities to their group companies should be at an arm’s length price as those to outside group companies,” the notification stated.