Mint Explainer | PLI reopened for white goods: a strategic move or an industry crutch?

Why has the government reopened the white goods PLI scheme? What does it cover?

The department for promotion of industry and internal trade (DPIIT), under the ministry of commerce & industry has reopened the PLI scheme for white goods—specifically for air conditioners and LED lights—from 15 September to 14 October, as it sees strong industry appetite for further investment. This is the fourth round of applications under the scheme, which was first notified in April 2021. The scheme, which will run till FY29, covers components and sub-assemblies across the entire value chain, including those not currently manufactured in India.

PLI offers 4–6% incentives (like cash backs) on incremental sales and aims to boost domestic manufacturing, reduce import dependence and create jobs. Both new applicants and existing beneficiaries seeking to scale up manufacturing are eligible under the same terms as the original 2021 guidelines.

What has been gained so far from the white goods PLI scheme, started in 2021?

Since its launch in 2021, the white goods PLI scheme has attracted ₹10,406 crore in investments from 83 companies, including Voltas, Blue Star, Daikin, Lumax Industries, Uno Minda and others. These investments are expected to generate production worth ₹1.72 trillion and increase domestic value addition from 15-20% to 50-70%.

The scheme has resulted in the manufacturing of critical components like compressors, copper tubes, heat exchangers and LED drivers, which were earlier imported. The government expects the additional application window will help attract more investment and accelerate India’s goal of building a competitive local supply chain in white goods.

Has India become self-sufficient in white goods, like it has in smartphones, meeting the entire domestic demand for white goods from local production?

India has made progress in white goods manufacturing, but it hasn’t yet achieved full self-sufficiency. Unlike smartphones — where local production now (around 300 million units a year) meets nearly all domestic demand and even exports — white goods still rely on imported components, like specialized electronics.

The PLI scheme is helping bridge this gap by incentivizing domestic production of such parts, but full self-reliance will require deeper supply chain integration, technology transfer in critical parts like printed circuit boards (PCBs), heat sinks, and LED drivers, and sustained investment. India is on the path, but it is not quite there yet.

Is it a good idea to reopen the PLI scheme? Will the industry become too dependent on sops?

Reopening the PLI scheme is a strategic move to capitalize on industry momentum and deepen domestic manufacturing. Both existing beneficiaries and companies that missed out earlier, can apply for the reopened PLI scheme. However, the new applicants will get benefits for only two years as the scheme ends in FY29.

While concerns about over-dependence on subsidies are valid, the scheme is structured with clear timelines and performance-linked incentives, not blanket incentive handouts. It encourages scale and local innovation. The key is to ensure that PLI acts as a catalyst—not a crutch—by gradually phasing out support as firms mature. If managed well, it can build long-term capacity and local capability.

What will be achieved from attracting new and existing applicants under the reopened scheme?

The white goods PLI scheme is expected to transform India’s manufacturing landscape by creating a self-reliant ecosystem for ACs and LED lights. LED light adoption in India is picking up fast, while only 8% of Indian households own an AC. The room air conditioner market is around 12 million units in India, and according to the International Energy Agency (IEA), it will increase ninefold by 2050.

The recent GST cuts (effective 22 September) will reduce AC prices by 7-8%, boosting demand. The PLI scheme will help boost domestic value addition to 50-70%, generate employment and reduce import dependency. The scheme also aims to make India a global supplier of components like compressors, motors, and LED chipsets. It will enhance exports, attract FDI, and integrate India into global supply chains—for electronics and energy-efficient appliances.

Is the white goods sector dependent on components for manufacturing? If so, how can PLI address this?

Yes, the white goods sector is heavily dependent on imported components such as compressors, heat exchangers, PCBs, LED chipsets. This dependency limits domestic value addition and exposes the industry to global supply chain disruptions.

Prior to the PLI scheme, manufacturers were just about making the plastic casings and rubber parts while dependent on imports of critical components, including electronic components. The PLI scheme encourages investment in component manufacturing, thereby building a domestic supply base. Over time, this will reduce import reliance, lower costs, and improve India’s competitiveness in both domestic and export markets.

Can India become a big hub for white goods manufacturing, catering to global demand as well?

India has strong potential to become a global hub for white goods manufacturing. With rising domestic demand, a large labour pool, and improving infrastructure, the country is well-positioned. The PLI scheme enhances this by attracting investment in high-value components and encouraging exports.

As global firms diversify supply chains away from China (the world’s largest AC maker at present), India offers a viable alternative. To build global scale, India must improve logistics, ensure consistent quality and invest in R&D. If these align, India could rival global leaders in white goods production.