White Goods PLI: DPIIT Issues FAQs, Says Companies Exiting Midway Will Have To Refund Incentives

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Additionally, the department has now also included more LED components such as resistors, fusers, LED transformers, among others, in the target segments and eligible products

The Department for Promotion of Industry and Internal Trade (DPIIT) has released FAQs on the production-linked incentive (PLI) scheme for white goods, revising a few guidelines.

In the FAQs, the department has said that if for any reason a company availing benefits under scheme fails to make full committed investment and exits midway, it will then have to refund the incentives taken along with interest. In addition, the bank guarantee will also be invoked.

“Midway exit by a selected applicant without fulfilling investment criteria, will thwart one of the selection criteria of maximizing Gross Value Added to economy, as also deprive
selection opportunity to another Eligible Applicant under the scheme,” said DPIIT.

“Therefore, if any selected applicant declines the offer of approval under the scheme at any stage or exits the scheme without making full committed investment for reasons whatsoever; in such case, the bank guarantee furnished by the selected applicant shall be invoked as per the provisions…the applicant shall have to refund the incentive availed by it under the scheme till such date along with interest calculated at the prevailing three years SBI MCLR compounded annually,” it added.

Additionally, the department has now also included more LED components such as resistors, fusers, LED transformers, among others, in the target segments and eligible products. Similarly, pre-qualification criteria can be met on the basis of audited financials for 2020-21.

“However, for applicants meeting the pre-qualification criteria on the basis of financial attributes of audited financial statements of FY21, the computation of net incremental sale of the eligible product shall be done on the basis of net sales turnover of eligible products in the base year of FY21, whichever is higher,” it said.

Till now, FY20 was treated as the base year for computing cumulative incremental investment, sales as well as financial attributes under pre-qualification criteria.

It has also clarified that in case an applicant does not meet criteria of threshold investment and net incremental sales for any given year, it would not be eligible for disbursement of incentive for that particular financial year.

However, it added that the applicant will not be restricted from claiming incentive for subsequent years during the tenure of the scheme, provided eligibility criteria of cumulative committed investment and threshold net incremental sales are met for such subsequent financial years.

Clarifying on whether the scheme will allow the eligible components to be sold to AC or LED Lights industry only or if it could be sold to across all sectors to achieve economy of scale, the department said that atleast 60 per cent of the net incremental sales shall comprise of the Eligible Product used in the manufacturing of ACs and LED Lights. Hence 40 per cent of net incremental sales across other sectors shall be permitted to facilitate economies of scale.

Furthermore, it also cleared the air on the demand for additional relaxation for the brownfield projects who have already invested in the eligible products. It said, “The Scheme does not intend to create any entry barrier for investments and offers incentives on fresh investments in a greenfield OR a brownfield project with same Investment: Sales ratio. Hence, it would not be prudent to provide any relaxation to the brownfield projects.”

Further, it stated that LLPs are not covered under the Companies Act, 2013, they cannot avail the benefits under this scheme, besides an applicant which is availing benefits under any other PLI scheme of the government for the same product(s). Value-added resellers also do not qualify under the scheme.

The PLI scheme for white goods has a budgetary outlay of Rs 6,238 crore and will offer an incentive of 4-6 per cent on incremental sales of goods manufactured in India to companies engaged in manufacturing of ACs and LED Lights.

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