Analysis
Explained: The Rs 10,683 Crore PLI Scheme For Textile Sector In India
- The Union Cabinet today (8 September) approved a Rs 10,683 crore Production Linked Incentive (PLI) scheme for the textile sector, which covers items from the MMF (man-made fibre) and the technical textiles sectors.
- India is currently a laggard in MMF textile trade due to high raw material costs, high tariff barriers and cheap imports from neighbouring countries.
A representative image of a textile factory.
The Union Cabinet approved a Rs 10,683 crore Production Linked Incentive (PLI) scheme for the textile sector today, 8 September. The scheme covers items from the MMF (man-made fibre) and the technical textiles sectors.
The scheme will be implemented by Piyush Goyal-led Ministry of Textiles (MoT).
The NDA government has already approved PLI schemes in 13 key sectors for enhancing India's manufacturing capabilities and exports. The union budget 2021-22 had allocated an outlay of Rs. 1.97 lakh crore for various PLI schemes. PLI schemes in sectors like electronic manufacturing and pharmaceuticals are already operational.
The current PLI scheme is expected to help attract additional investment by existing companies in the MMF and technical textile sectors and usher in new investments by Indian and multinational companies in this segment.
India is currently a laggard in MMF textile trade due to high raw material costs, high tariff barriers and cheap imports from neighbouring countries.
In an official statement, the government said that the PLI scheme for textiles will lead to fresh investment of more than Rs 19,000 crore and could potentially help achieve a cumulative turnover of over Rs.3 lakh crore.
The government also estimates that the incentive scheme will help create additional employment opportunities of more than 7.5 lakh jobs in textile sector and several lakhs more in allied activities. Textiles and apparel sectors are also the second largest employment generators, next to agriculture sector, helping provide over 100 million direct and indirect jobs.
The scheme aims to enhance India’s manufacturing capabilities by increasing investment and production in the textile sector, especially in the MMF segment and technical textiles under greenfield and brownfield investments.
The government also hopes that incentives offered under the PLI scheme will create a select group of world-class companies in the MMF and technical textile segments, which have the potential to grow, both in size and scale, using cutting-edge technology and thereby penetrating global value chains.
Indian textiles and apparels industry is among the largest in the world, and is a key contributor to the country's export basket, contributing about 12 per cent of export earnings.
Along with existing schemes like RoSCTL, RoDTEP and other measures by government, including providing raw material at competitive prices, specially-designed skill development, the government hopes that the newly-unveiled PLI scheme will give a fillip to the sector.
Scheme Coverage And Details
The PLI scheme will cover approximately 40 product categories under MMF and about 10 in the technical textile segment.
Under MMF, the scheme will cover product categories like jerseys, pullovers, trousers and shirts of man-made fibres. The technical textile category is set to cover products like diapers, adhesive dressings, bandages and safety airbags.
"The Technical Textiles segment is a new age textile, whose application in several sectors of economy, including infrastructure, water, health and hygiene, defense, security, automobiles, aviation, etc. will improve the efficiencies in those sectors of economy. Government has also launched a National Technical Textiles Mission in the past for promoting R&D efforts in that sector. PLI will help further, in attracting investment in this segment." the official press release by the government said.
Incentive Offered
The scheme will provide incentives to both greenfield and brownfield investments; the support is expected to be in range of 3 per cent to 11 per cent of the incremental revenues’ year-on-year for five years.
The scheme will incentivise two types of investments with different set of incentive structure.
Any firm/company willing to invest minimum Rs 300 crore in Plant, Machinery, Equipment and Civil Works (excluding land and administrative building cost) to produce products of Notified lines (MMF Fabrics, Garment) and products of Technical Textiles.
Any firm/company willing to invest minimum Rs 100 crore shall be eligible to apply for participation in this part of the scheme.
The scheme will prioritise incentives for firms willing to invest in aspirational Districts, Tier 3, Tier 4 towns, and rural areas.
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