The ministry has identified 50 key sectors, within which it aims to introduce the production linked scheme (PLI) to give a boost to the industry.
India’s Textiles Ministry is mulling a scheme estimated to cost over Rs 10,000 crore to promote the domestic production of a number of products such as sanitary pads, tampons, sweaters and jerseys.
The Ministry has identified 50 key sectors, within which it aims to introduce the production linked scheme (PLI) that will boost the sector’s growth towards a global textile player. While the budget for the scheme has been approved, the final scheme will be presented to the cabinet. A ministry official confirmed that scheme was in the process of being finalised and was waiting for the expenditure finance committee’s approval.
The textile scheme will offer three categories on which incentives will be provided, for already active players brackets of Rs 100-400 crore and over Rs 400 crore of net turn over exists. It will have a five-year gestation period. “In this case, the idea is that if the company in the first category receives a 50% incremental turn over, they will be provided with 9% seed funding from the government,” said an official on the condition of anonymity. “For the second category, 7% on net incremental turn over will be disbursed.” The base year to determine the net incremental turn over will be 2019-20 and the scheme is likely to come into effect from 2022.
For new companies venturing into textile, a category called Greenfield will apply. These companies will have to make at least a Rs 500 crore investment, on which the gains would be 11% to start with.
The move will also create a paradigm shift in the Indian textile production market, which officials said is largely cotton driven. India’s mill fibre consumption of cotton is nearly 60%, while MMF is barely 34%. Globally, however, the trend is reversed with cotton being barely 30% of consumption and MMF accounting for 70%.
“What we are trying to achieve is shift towards man-made fibre, a sector in which India lags behind globally,” said a second official. At present, India’s share in the MMF market is near 20%, compared to China and Vietnam, which are poised at over 40%.
The scheme will focus on end-to-end results, from processing raw material to export of finished products. This, say officials, will form the base of the structural changes in the Textile sector for India.
In terms of export of jackets for men and boys made from synthetic fibres, that is one of the key sectors identified, India constitutes barely 0.9% of the global market. It lags behind Bangladesh, 3.1%, and Vietnam, 9.4%. In terms of women’s or girls briefs and panties, India’s share is a mere 0.4%.
When it comes to export of technical textiles such as tampons and sanitary napkins, the country fares even worse with a share of 0.23% of the US$ 15.75 billion market. Other such items that make up a key focus area are sports and outdoors garments (swimming), 1.63% and sterile surgical catgut, suture materials, 0.57%.
Indian Technical Textile Association chairperson Dr. Sundararaman has termed the scheme a unique one, as it is a turnover linked scheme, and not limited to just the small and medium enterprises