Land and building investments are not covered under the PLI scheme.

Investments in land and buildings necessary for a project will not be included under the production linked incentive (PLI) scheme for ACs and LED lights, and will not be included when establishing a company’s eligibility to benefit from the program.

This is part of the rules provided on Friday by the Department for Promotion of Industry and Internal Trade (DPIIT) for the PLI initiative, which promotes local manufacture of white goods (only air conditioners and LED lights).

Only qualified candidates are entitled to apply for the scheme’s benefits, and the rules outline the investment criteria for evaluating eligibility.

It said that eligibility will be contingent on meeting standards for net additional sales of the items for the relevant fiscal year above the base year (2019-20) and cumulative additional investment in the preceding fiscal.

According to the guidelines, “Investment in land and building (including factory building or construction) necessary for the project or unit will not be covered under the plan and hence must not be included for assessing eligibility under the scheme.”

Expenses for consumables and raw materials used in production are not considered investments.

The standards state that “no second hand/used reconditioned plant, machinery equipment, or utilities must be used to make the qualified product.”

If an application does not achieve the conditions of threshold investment and threshold net incremental sales for any given fiscal year, it will be unsuitable for financial incentives for that fiscal year.

The investment will include costs for a new plant, machinery, equipment, and utilities, as well as research and development (R&D) and technology transfer related to the product’s manufacturing facilities.

According to the standards, R&D spending should not exceed 15% of the total committed investment.

From June 15 through September 15, the scheme application window will be open and applications are not accepted thereafter.

The Guidelines also indicated that, in addition to audited financial records, a petitioner will have to present an annual disbursement claim for the sales in the year.

The scheme will be carried out by a project management agency (PMA), which will be in charge of secretarial, managerial, and implementation assistance.

The agency would monitor the progress of the selected applicant’s project in relation to the pledged investment as and when necessary and may conduct physical inspections of an applicant’s manufacturing units and offices.

An applicant would be required to present information such as ownership pattern, committed cumulative investment, details of board of directors and key management staff, promoter, and a yearly plan for domestic value addition, as well as details of each group business, in the application form.

The government has authorized a PLI scheme for white goods, including air conditioners (ACs) and LED lights, with a budget of Rs 6,238 crore. It will be put in place from 2021-22 to 2028-29.

The concept provides financial incentives to increase domestic production and attract substantial investments in the value chain of white goods manufacture.

According to Anand Ramanathan, Partner at Deloitte India, the PLI programme introduced to promote domestic production of white goods would assist generate higher levels of investment and production localisation.

“The initiative will also assist mature the supply chain eco-system and boost India’s appeal for exports,” he said.