Production Linked Incentive (PLI) Scheme For Promoting Domestic Manufacturing Of White Goods (Air Conditioners & LED Lights)- Corrigendum To Guidelines Dated June 4, 2021

The Department for Promotion of Industry and Internal Trade (DPIIT) has, vide Corrigendum dated October 9, 2023, issued certain clarifications regarding the Guidelines dated June 4, 2021, in respect of the PLI Scheme for Promoting Domestic Manufacturing of White Goods (Air Conditioners and LED Lights) which was announced vide Gazette Notification dated April 16, 2021.

The Scheme aims to provide financial incentives to boost domestic manufacturing and attract large investments in the manufacturing of White Goods to create economies of scale, enhance exports and create a robust ecosystem for components of White Goods in addition to acting as a source of employment generation. The Scheme is valid for FY 2021-22 to FY 2028-29 and has a budget of Rs 6238 crores.

The PLI scheme extends an incentive of 4% to 6% on incremental sales (net of taxes) for 5 years subsequent to the base year and a one-year gestation period. Actual disbursement of PLI for any year will be based on an assessment of parameters being met in the subsequent year. The applicants have to fulfil both criteria of cumulative incremental investment in plant and machinery as well as incremental sales over the base year in that year to be eligible for PLI. Investment in land and buildings is not included in the assessment of eligibility under this Scheme.

The guidelines to the Scheme lay down all the criteria, such as base year, eligibility criteria, target segments, quantum of investment, pre-qualification criteria for different target segments, and application period.

Based on the suggestions from industry stakeholders, DPIIT has notified the following changes in the Guidelines dated June 4, 2021, for the benefit of the participating White Goods Manufacturers:

  1. In clause 11.1(c), in case of captive consumption by group companies, the gross sales turnover of eligible products shall be calculated by multiplying the actual quantity of goods sold with a lower of the Arm’s length price and a margin of 5% as certified by a Cost Accountant or the actual transaction price offered to Group companies.
  2. In clause 11.1(d), the same criteria mentioned above in clause 11.1(c) shall apply in case of sale to group or non-group companies.
  3. A new clause 11.2 has been added, which states that verification of eligibility of claims and disbursement of incentives shall be done by the PMA, i.e. the Project Management Agency, which is the public financial institution designated by the DPIIT to act on its behalf for this purpose.
  4. In clause 2.8, the definition of the Arm’s length price stands modified. The price applied or proposed to be applied in a transaction in uncontrolled conditions has to be further certified by a Cost Accountant to be valid as per the Cost-Plus Method of Computation.
  5. In Clause 8.1.1, investment for determining eligibility stands revised to include Tool Room, which was not included in the initial Guidelines.
  6. In Clause 12.4, the deadline for filing a claim has been revised to January 15 in the following financial year to which the claim pertains as opposed to October 31 in the initial Guidelines. Further, in the event of any discrepancy observed between Statutory Compliances and records provided at the time of filing the claims, the applicant shall return the excessive incentive availed along with the interest calculated at 3 years SBI MCLR prevailing on the date of disbursement, compounded annually for the period between excess payment and date of refund.
  7. A new Clause 14.7 has been added, which extends the time for setting up an additional manufacturing facility at a location and submission of documents to substantiate the same to within 3 years of commencing commercial production from the earlier mentioned 2 years in the FAQ of the initial Guidelines.
  8. In clause 13.3, it is clarified that in addition to the role played by the Project Management Agency in carrying out the physical inspection of the offices and manufacturing units of the applicant, the Administrative Ministry may also visit manufacturing facilities to review the progress made under the Scheme and also solicit feedback from the industry.
  9. A new para 10.11 has been added to include the Rollover of the Bank Guarantee prior to the expiry of the existing Bank Guarantee during the tenure of the Scheme.

To incorporate the changes mentioned above, there are revisions in certain proforma that are to be submitted by the applicants under the Scheme. The revised annexures are incorporated in the Corrigendum as part of the APPENDIX and will be used by the applicants in place of the earlier forms. These forms pertain to the following:

  1. Annexure IIA- Bank Guarantee for availing incentive against Incentive.
  2. Annexure II B- Undertaking for Bank Guarantee against Proposed Investment
  3. Appendix V- Quarterly Review Report
  4. New Annexure I – Integrity Compliance in Production Linked Incentive Scheme
  5. Format of letter for Declaration under the Disbursement Claim Form issued to IFCI by the applicant.
  6. Format of Auditor Report of Applicant company to IFCI along with Annexures I to VI
  7. Appendix IV B- Independent Auditor’s Certificate for Incremental Sales & Investment to IFCI along with annexures I to IX
  8. Letter to IFCI by Applicant regarding Integrity Compliance in PLI Scheme – 2 formats for ensuring compliance with anti-corruption laws.
  9. Draft of Undertaking for verifying the sales figures and authenticity of data shared for availing PLI scheme.
  10. Draft of Undertaking for Claim Submission to be submitted to IFCI by the applicant.

The above guidelines and the changes introduced are expected to further facilitate and simplify the procedure by clearing existing doubts and providing a roadmap for availing the incentives under the PLI scheme with transparency and accountability, thus removing any ambiguity that may have existed. The DPIIT shall continue to issue further clarifications as and when required to facilitate the seamless implementation of the policy.