Due to the PLI scheme, big companies can promote manufacturing at the domestic level. In order to become a component in the country itself, the government is increasing the import duty. In this budget, the import duty on AC compressor has been increased from 7.5% to 15%.
Due to the heat, the demand for air conditioners has increased significantly.
The market for electrical equipment is likely to remain strong this time. After the announcement of Production Linked Incentive (PLI) by the government, it is believed that an increase of Rs 65,000-75,000 crore can be seen in this market. This has been told in a report. In order to increase production in the country and weaken its imports, the government had announced the PLI scheme in the recent budget.
The PLI scheme for air conditioners has given the advantage that if a company uses parts or spares made in the country, then it will be given a rebate of 4-6 percent for 5 years. The reason behind giving huge incentives in PLI scheme is to encourage domestic and foreign companies to use domestic goods.
Emphasis on reducing imports
The market for electrical equipment depends largely on import goods. Main components such as compressors, condensers and blower motors are sourced from abroad. About 75 percent components have to be imported, including the PCB circuit. This component is up to 55-60 percent of the full price of AC. If the price of AC is to be reduced, then the price of these components will have to be reduced. Component prices will come down only when the import duty or import prices are reduced. For this, construction will have to start in the country itself. To promote this, the government has announced the PLI scheme.
A provision of Rs 6,238 crore has been made for AC and LED in this budget. 60 percent of this budget will go into the AC segment, which is expected that this time the revenue from AC can reach 65 thousand crore to 75 thousand crore. According to the report, due to the PLI scheme, the cost of local manufacturing can fall by 8-12%. This is expected to make AC cheaper.
Compressors and motors will be made in the country
For the past few years, many companies have been making compressors, motors, outdoor and indoor units, heat exchangers etc. in the country. Some companies have also set up manufacturing units here. Companies like Hitachi and Media Group have also set up units to make compressors here. Till now, companies have been sourcing the main components related to AC from countries in China and South East Asia. The government has brought a PLI scheme to change this trend.
Domestic companies boost
Due to the PLI scheme, big companies can promote manufacturing at the domestic level. In order to become a component in the country itself, the government is increasing the import duty. In this budget, the import duty on AC compressor has been increased from 7.5% to 15%. The import of Fully Finished AC has been doubled to 20 percent. Import of AC that comes with refrigerant has been completely stopped. Due to this, the import of AC has come down and it has come down from 49% to 40%.
AC market will increase in the country
Due to the PLI scheme, the dependence on Chinese components in the market will be reduced. Components coming from China are cheaper than India’s goods by 15-20 percent, which preparations have started to reduce. For this, competition will be increased in the market by giving PLI to companies and goods made in the country will be promoted. According to an estimate, in the next 5 years, the AC market in the country can grow up to 15-18 percent.
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