Consumer Durable Sector Update - PLI To Foster Component Ecosystem: Prabhudas Lilladher
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Prabhudas Lilladher Report
Government has approved the production linked incentive scheme for air conditioners and LED Lights to be implemented over FY22 to FY29 with a budgetary outlay of Rs 62.4 billion (4-6% incentive on incremental sales over base year FY20).
Given the contours of the scheme, we believe this shall promote onshore manufacturing of critical components like compressors, motors, printed circuit boards, LED chips amongst others.
We remain unsure on the participation of local brands given the capital intensive nature and need of large economies of scale for these components.
Nevertheless, creation of a robust component ecosystem by ancillary entities remains a positive for brands as it shall help -
- accelerate import substitution and
- shrink lead times thereby reducing working capital requirements.
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