)
Companies such as Haier, Panasonic and Videocon among a host of other players are expected to tap the Modified Special Incentive Package Scheme (M-SIPS) that was extended last week by the Narendra Modi Government.
M-SIPS, first introduced in 2012 as part of the National Policy of Electronics, provides a 20-25% subsidy on capital expenditure for manufacturers of electronics and consumer durables.
Durable majors, in fact, had been lobbying hard for over a year for inclusion of categories such as washing machines, air conditioners and refrigerators in M-SIPS so that they could take advantage of the scheme. M-SIPS had originally proposed incentivising only electronic goods makers such as IT, mobile and LED panel makers.
In a cabinet meeting last week, the Narendra Modi government not only agreed on extending the M-SIPS programme by five years, but also including 15 more categories to cover home appliances as well under it. A notification on the extended scheme is expected shortly.
More importantly, the move will trigger a wave of investments, experts say, much more than the nearly Rs 15,000 crore that the scheme received in the first leg between 2012 and 2014. Out of these investment proposals, 16 projects totaling Rs 2,230 were approved by the government, industry sources said. The expectation is that the Narendra Modi government will streamline the process of application, clearing projects quickly. This, they say, is part of Modi's Make in India and Digital India programmes.
"This is a step in the right direction," Eriz Braganza, president, Haier Appliances India, said. "We are planning to make an investment of Rs 460 crore for expanding our existing manufacturing facility in Pune. We will route this through M-SIPS," he said.
Anirudh Dhoot, director, Videocon Industries, also indicated that his company was looking to tap into the M-SIPs programme. He declined to specify the investment though his company was looking to make under M-SIPS. Panasonic too did not specify the investment the company was looking to make under M-SIPS. But both Videocon and Panasonic were among a clutch of companies last year who had approached the department of electronics and information technology with investment proposals, seeking incentives under M-SIPS, which was then offered to only electronic goods makers, persons in the know said. These companies are expected to go back to the department now with their fresh investment proposals, since the scope has been widened, persons in the know said.
Manish Sharma, MD, Panasonic India, said, in reply to an email, "We welcome the initiative by the government. Broadening the scope of M-SIPS will trigger growth in the sector, especially for products such as washing machines, refrigerators and air-conditioners. Further, the incentives have been allowed from the date of submission of application, and disbursement of benefits will be done on a quarterly basis as opposed to annual basis. Also, benefits will be available across the country as opposed to only in notified areas and for brownfield as well as greenfield projects."
Panasonic has already invested Rs 1,700 crore so far at its Jhajjar facility in Haryana, which was set up in 2012. Apart from manufacturing welding system (the Panasonic group is present in a number of areas in India including engineering), the Jhajjar facility produces air conditioners and washing machines. The plan is to export ACs and washing machines to West Asia and Africa shortly as part of the company's broader objective of converting India into a manufacturing hub for the Asian and African regions. Industry sources M-SIPs will give the company the necessary impetus in this endeavour.
Chinese major Haier too proposes to manufacture more products locally. Its existing facility in Pune makes mainly refrigerators, with an installed capacity of 1 million units. The plan is to double this capacity to two million units in the next two years and also begin making products such as washing machines, air conditioners, water heaters and TVs - currently given to original equipment manufacturers (OEMs), who make it on the basis of specifications and moulds provided by Haier.
