PLI scheme: Voltas, Blue Star among AC biggies planning to invest ₹3,000 crore – The Economic Times

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Voltas, Blue Star, Dixon, China’s GMCC, Amber Enterprises, Panasonic, Lloyd and Hindalco are set to apply for the government’s production-linked incentive (PLI) scheme for air-conditioner components, bringing immediate investments of more than ₹3,000 crore, multiple industry

Voltas,Blue Star, Dixon, China’s GMCC, Amber Enterprises,Panasonic, Lloyd and Hindalco are set to apply for the government’s production-linked incentive (PLI) scheme for air-conditioner components, bringing immediate investments of more than ₹3,000 crore, multiple industry executives said.

This scheme for ACs is open only for the production of components — unlike in mobile phones where finished products are also covered — and several companies that were considering investing in manufacturing of air-conditioners expecting finished goods will be allowed have therefore shelved their plans, the executives said.

The application window for the PLI scheme for air-conditioner components ends on September 15.

While an email sent to the Aditya Birla Group seeking comment on its Hindalco unit remained unanswered as of press time on Tuesday, executives at other companies confirmed their investment plans.

Contract manufacturer Amber Enterprises will make a ₹400-crore investment proposal, while Blue Star will set up a plant for heat exchanger and sheet metal as part of its ₹250-crore investment.

No Decision Yet by SamsungLG, Others
Dixon is entering into a joint venture with a Japanese company to manufacture printed circuit boards for air-conditioners. GMCC, the world’s largest compressor manufacturer owned by China’s Midea Group, is setting up a compressor plant near Pune at an investment of around Rs 700 crore.

For ACs, 75-80% of the components are currently imported, whereas more than 95% of ACs are now locally manufactured, after the government banned import of ACs with refrigerant.

Several large manufacturers such as Samsung, LG, Godrej Appliances and Daikin are still evaluating whether to apply and industry executives said some may back out since the PLI scheme is focused on components and not finished goods. The industry was lobbying for including finished products as well under the scheme, and had plans to invest in both.

Companies such as Carrier Midea and Haier are completing existing manufacturing investment plans and are unlikely to make fresh investment in AC component manufacturing, industry executives said.

Havells-owned Lloyd has postponed its plans to set up a new plant for AC manufacturing and instead, will now apply for smaller investment in heat exchanger manufacturing, they said.


The chief executive of a large multinational AC maker said a finished goods plant for ACs along with components needed higher investment, which several companies were planning, as they were also aiming to start exports from India. Those plans are now deferred due to the absence of PLI benefits, the CEO said.

Losing An Edge

The absence of incentives on finished goods, industry executives said, would mean India wouldn’t have any competitive edge on AC exports as compared to China. Also, local industry production will not scale up and, hence, investing huge money in components may not justify economies of scale.

“With just components, the domestic market scale is not sufficient to justify high investment for components, that too for products like compressors and copper tubes, which require higher investment,” said the chief executive of a large appliance company.

The government made it clear last month that the scheme was only for AC components and would not include finished goods. It has allocated Rs 6,238 crore for five years under the PLI scheme for AC and LED lights together.

India sells around 7.5 million ACs per annum, but the market was badly affected in 2020 and 2021 due to the Covid-19 waves during summer. Domestic production was estimated to touch 40 million units in the next five years, as per studies conducted by the industry after the PLI scheme was initially announced, with 16 million units for exports alone. Industry executives said exports are now ruled out, with no incentives for finished goods.

Panasonic India chief executive Manish Sharma, who also leads the industry through Ficci, said his company would be applying but was still contemplating the products. “However, we expect industry-wide investment will be over Rs 5,000 crore for PLI for AC components in the next five years,” he said.

Pradeep Bakshi, managing director of Tata-ownedVoltas, said the company was keen to invest in PLI for AC components, but would need foreign expertise and was finalising plans right now.

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