Third phase of PLI scheme for ACs and LED lights attracts 38 companies, total applicants reach 93 | Mint

New Delhi: The third phase of the Production-Linked Incentive (PLI) scheme for air-conditioners and LED lights has seen participation from 38 companies, bringing the total number of applicants since its launch in April 2021 to 93, a senior government official said.

Major companies such as Daikin, Voltas, Blue Star, Amber, and Epack have submitted applications in this phase, with a proposed investment of ₹4,121 crore.

Reopened window

In July, the government reopened the application window for its ₹6,238 crore PLI scheme for ACs and LED lights to accommodate additional players, following increased interest from several firms.

“The application window for the PLI scheme for white goods was reopened in response to the industry’s growing appetite to invest further, driven by the expanding market and the confidence generated through the local manufacturing of key components for ACs and LED lights in India under the scheme,” said Sanjiv, joint secretary, Department for Promotion of Industry and Internal Trade (DPIIT).

“While the overall production of white goods is scaling new heights, the scheme — implemented in three phases—has notably accelerated compressor manufacturing, with India on track to achieve the production of 80 lakh (8 million) compressors. India was a net importer of compressors prior to the launch of the scheme,” said Sanjiv.

Among the applicants, 20 are for AC components ( ₹3,679 crore) and 18 for LED Lights ( ₹442 crore).

Rise in value addition

The scheme is benefitting the sector as value addition has increased from 25% to about 50%. According to industry players, this could increase to about 80% in the coming years.

The applicants are expected to recover around 50-55% of their investment through various incentives. In addition to this, they will receive support from state governments, and the DPIIT will assist in setting up their plants by coordinating with state authorities.

Over the next three years (till 2028-29), 38 companies are expected to achieve production of about ₹55,877 crore for AC components and LED Lights while generating direct employment for more than 47,000 people.

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Investment footprint under the PLI for white goods has increased from 16 to 18 states/UTs including Odisha and Jammu and Kashmir. In 2022-23, the government disbursed ₹80 crore to the beneficiary firms. The disbursed amount for FY24 is awaited.

The number of manufacturing locations has increased by 51, bringing the total to 179, up from the previous count of 128.

A total of 36 MSME companies have now committed investments under the PLI scheme. The initial 23 MSME companies had committed ₹1,042 crore, and with the addition of 13 more MSMEs investing ₹747 crore, the total investment commitment from MSMEs now stands at ₹1,789 crore.

According to German data research portal Statista, the revenue in the air conditioning market in India is expected to reach $5.88 billion in 2024, with a projected annual growth rate of 16.56% (CAGR 2024-2029). The volume of air conditioning units in the market is anticipated to reach 22.9 million pieces by 2029.