The Ministry of Commerce & Industry has approved 24 companies under the Production-Linked Incentive (PLI) scheme for white goods (air conditioners and LED lights) in the third round of applications. These companies have committed to invest a total of ₹3,516 crore in the manufacturing of components for ACs and LED lights. This round saw significant interest, with 38 companies applying, including 8 existing beneficiaries of the scheme. Notably, 43% of the new applicants are Micro, Small & Medium Enterprises (MSMEs), indicating growing confidence in the sector. The PLI scheme aims to boost domestic manufacturing, reduce import dependence, and create jobs. This round’s focus is on components not currently manufactured in India in sufficient quantities, strengthening the entire value chain. Some of the companies participating include Daikin, Voltas, Blue Star, Dixon, and Crompton Greaves. The government expects the PLI scheme to bring in a total investment of ₹11,083 crore in the component manufacturing ecosystem for ACs and LED lights.
Key Insights:
- Boost to Domestic Manufacturing: The PLI scheme incentivizes companies to manufacture components within India, reducing reliance on imports and promoting self-reliance.
- Focus on Component Manufacturing: This round emphasizes the production of components not readily available in India, leading to a more robust and complete manufacturing ecosystem.
- MSME Participation: The high participation of MSMEs signifies the scheme’s success in encouraging smaller players to contribute to the manufacturing sector.
- Job Creation: Increased domestic manufacturing is expected to generate employment opportunities across the value chain.
Investment Implications:
- Positive for Participating Companies: Companies like Daikin, Voltas, Blue Star, Dixon, and Crompton Greaves could benefit from the incentives, potentially leading to improved profitability and market share.
- Growth in Electronics Sector: The PLI scheme is likely to drive growth in the electronics sector, particularly in the manufacturing of ACs and LED lights.
- Increased Investor Confidence: Government support and increased investment in the sector may attract more investors, boosting the stock market performance of related companies.
- Long-Term Growth Potential: Investors with a long-term horizon might consider companies benefiting from the PLI scheme as potential investment opportunities.
Sources:
- Press Information Bureau (PIB): https://pib.gov.in/PressReleasePage.aspx?PRID=2094465
- Economic Times: https://government.economictimes.indiatimes.com/news/economy/pli-scheme-for-white-goods-attracts-38-companies-with-net-committed-investment-of-4121-crore/114237080
- Fortune India: https://www.fortuneindia.com/enterprise/43-of-new-applicants-for-white-goods-pli-from-msme-sector/118792
