The new production-linked incentive (PLI) scheme aimed at encouraging domestic production of white goods will reduce import dependence over the medium term, said India Ratings and Research (Ind-Ra).

As a result, the scheme for Air conditioners will provide an incentive of 4-6 per cent on incremental sales of goods manufactured in India over a period of five years. The minimum investment varies, depending on the nature of projects as well as on the nature of the component.

The scheme is expected to attract investments from various domestic and global players. The domestic white goods industry is heavily dependent on imports for critical components such as compressors, condensers and blower motors.

According to the Consumer Electronics and Appliances Manufacturers Association, 75 percent of components (by value) are imported. Compressors, condensers, blower-motors and PCB circuits, which account for 55-60 percent of the total cost of an AC, are imported. The total budgetary allocation for the scheme is Rs 6,238 crore for ACs and LEDs, but a proper breakup is not available. Assuming 60 percent of the total budgetary support goes to the AC segment, the scheme has the potential to generate incremental revenue of Rs 65,000-75,000 crore, India Ratings said.

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