PLI Scheme To Create Vibrant Synthetic And Technical Textile Industry In India

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US$ 1.45 Billion Impetus To Boost Manmade Fibre And Technical Textiles Sector

Government of India, with the aim to boost domestic production, value addition and employment generation in Manmade Fibre (MMF) and in Technical Textiles Sector, has cleared the Production Linked Incentive (PLI) scheme for textile industry in the beginning of September. The scheme with a budgeted outlay of Rs 10,683 crores (US$ 1.45 Billion) which was already announced last year, received Cabinet’s approval with amendments to the incentive structure and product categories based on industry feedback.

Tentative*

Globally, consumer preferences have changed from cotton to MMF (approximately 75%) while Indian industry is yet highly cotton dominated. Thus, government’s supportive schemes were always focused towards cotton sector and this probably, is the first time that the ground has inevitably shifted towards MMF and in line with global textile and apparel trade.

Policy makers have finally recognised the importance of having a vibrant MMF based textile and apparel chain that is capable of catering to the world market. The PLI Scheme has thus received widespread welcome from the industry and would provide impetus to craft a meaningful industrial sector that would attract around 70 companies. These beneficiary companies with investment of around Rs 19,000 crore, would create world scale capacities, increased exports and much needed jobs.

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Products Included in PLI Scheme
The PLI scheme specifically aims to draw investment to 40 MMF apparel product lines (50 products in 8-digit HS code), 14 MMF fabric lines (42 products in 8-digit HS code) and 10 segments of technical textiles (covering 95 products in 8-digit HS code). These product lines have been selected based on the global market size as well as India having less than a 5% share in each of them. The inclusion of intermediate products like MMF fabrics are done based on industry’s request and to ensure that the scheme ultimately finds industry support to achieve its objectives. Here to note that MMF based product export share is less than 30% of India’s total textile and clothing export of US$ 33 billion in last fiscal.

Tentative List of Product Lines For PLI Scheme (6 and 8 digits)

Incentives Offered under PLI Scheme

The incentives under PLI scheme have been categorised into two schemes based on investment.

Scheme I includes enterprise investing at least Rs 300 crore in plant and machinery (excluding land and administrative building) to produce specified product(s) would need to achieve a minimum turnover of Rs 600 crore before becoming eligible to receive the incentive over a five-year period. The gestation period offered to achieve this turnover is maximum of two years.

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Tentative List of Product Lines For PLI Scheme (6 and 8 digits)

Incentives offered under Scheme I is 15% in the first year of eligibility and thereafter reduces by 1% each year for next four years provided the enterprise achieves incremental turnover of 25% over each previous year. From second year onwards, incentive offered is calculated on the increased turnover only (increased turnover over the minimum 25% will have a cap of max 10% for calculation of final incentive).

Under Scheme II, enterprise has to make investment of minimum Rs 100 crore in plant and machinery (excluding land and administrative building) to produce specified product(s) and would need to achieve a minimum turnover of Rs 200 crore to qualify for the incentive. Here also, a two-year gestation period has been offered to achieve the qualifying turnover.

Incentives offered under Scheme II is 11% in the first year of eligibility and thereafter reduces by 1% each year for next four years provided the enterprise achieves incremental turnover of 25% over each previous year. From second year onwards, incentive offered is calculated on the increased turnover like Scheme I.

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Eligibility Criteria

Enterprises that are willing to enroll under the PLI scheme have to fulfill certain specified criteria like Location, Financial Capacity, Relevant Experience & Technical Capability, Investment Size, Job Creation, Product Line in addition to coverage of the production chain (fibre to garment). Textile Ministry shall select applicants on the basis of recommendation of a selection committee under the chairmanship of Secretary, Textiles. Application window for the selecting applicants under the PLI scheme shall be opened from 1st Nov – 31st December, 2021.

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