The Department for Promotion of Industry and Internal Trade (DPIIT) said that companies that avail benefits under the production-linked incentive (PLI) scheme for making components of ACs and LED lights will need to adhere to conditions of an exit clause. A company availing benefits under this scheme, if for any reason fails to make full committed investments and exits midway, will need to refund the incentives taken along with interest and its bank guarantee will also be invoked, it stated as part of revised guidelines.
Experts said this is being done to ensure only serious players apply for the scheme. “Midway exit by a selected applicant without fulfilling investment criteria will thwart one of the selection criteria of maximising Gross Value Added to economy, and also deprive selection opportunities to another Eligible Applicant under the scheme,” DPIIT explained.
List widened
Meanwhile, DPIIT also widened the list of components for LED lights for which benefits can be availed under the scheme. It has added components such as fuses, laminates, LED transformers, laminate for printed circuit boards (PCBs), and metal-clad PCBs among others.
Abhishek Jain, Tax Partner, EY, pointed out that various relaxations have now been provided to encourage industry participation. “Pre-qualification criteria can also now be met on the basis of audited financials for FY21. Additional components have been included in the target segments for LED (components) and flexibility has been given to meet 40 per cent of net incremental sales of eligible products from sales to sectors other than ACs and LED lights,” he added.
Earlier, DPIIT said that for the pre-qualification criteria, FY20 will be considered as the base year for calculation of cumulative incremental incentive and net incremental sales of eligible products.
Must meet criteria
In the FAQs released, DPIIT said that in case an applicant does not meet the criteria of threshold investment and threshold net incremental sales for any given year, the applicant shall not be eligible for disbursement of incentive for that particular financial year.
“However, 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,” it added.
DPIIT has also clarified that limited liability partnerships cannot avail PLI benefits under the scheme.
The Central government notified the PLI scheme for white goods (ACs and LED lights components) in April with an allocation of ₹6,238 crore from FY22 to FY29.The application window for the scheme was opened on June 15 and the deadline has been set for September 15.