“The government’s approval of the PLI scheme for the textile industry led by Prime Minister Narendra Modi ji will further strengthen the foundation of a self-reliant India.
This will enable Indian companies to emerge as champions in the global market as well as create jobs in the rural areas of the country,” said Union Minister Piyush Goyal while announcing Govt’s big move to support the crippling textile and apparel sector from the impact of COVID.
The PLI scheme outlay is expected to be Rs. 10,683 crores, and it will be valid for five years.
To mitigate its long-term impact of pandemic and support their resurgence, the Indian government has taken several steps, including introducing the Production Linked Incentive (PLI) scheme for various sectors, including the textile sector.
The scheme is expected to drive the production of textiles in India and find its way to the export markets.
There will be incentives for manufacturing and exporting specific textile products made of man-made fiber.
Depending on the size of investments and turnover, it could vary between 10 and 11% after meeting certain conditions.
It will be trimmed by 1% each year after the first year and granted for five years starting FY22.
This applies to 40 man-made fiber items and 10 technical textiles products. The government is also considering Cotton-based products.
The PLI scheme will also generate additional employment of over 7.5 lakh directly and several lakhs more for supporting activities.
This scheme will positively impact especially States like Gujarat, UP, Maharashtra, Tamilnadu, Punjab, AP, Telangana, Odisha, etc.
PLI for Textiles along with RoSCTL, RoDTEP and other measures of Government in the sector e.g. providing raw material at competitive prices, skill development, etc will herald a new age in textiles manufacturing.
PLI scheme for textiles is part of the overall announcement of PLI Schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of Rs 1.97 lakh crore.
With the announcement of PLI Schemes for 13 sectors, minimum production in India is expected to be around Rs 37.5 lakh crore over 5 years and the minimum expected employment over 5 years is nearly 1 crore.
“PLI scheme for textiles will promote the production of high-value MMF fabrics, Garments, and Technical Textiles in the country. The incentive structure has been so formulated that industry will be encouraged to invest in fresh capacities in these segments,” Goyal said.
The Technical Textiles segment is a new age textile, whose application in several sectors of the economy, including infrastructure, water, health and hygiene, defense, security, automobiles, aviation, etc. will improve the efficiencies in those sectors of the economy.
The 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.
There are two types of investment possible with a different sets of incentive structures.
Any person, (which includes 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, shall be eligible to apply for participation in first part of the scheme.
In the second part any person, (which includes firm / company) willing to invest minimum Rs 100 Crore shall be eligible to apply for participation in this part of the scheme.
In addition, priority will be given for investment in Aspirational Districts, Tier 3, Tier 4 towns, and rural areas and due to this priority Industry will be incentivized to move to backward area.
It is estimated that over the period of five years, the PLI Scheme for Textiles will lead to fresh investment of more than Rs 19,000 crore, cumulative turnover of over Rs 3 lakh crore will be achieved under this scheme.
India is the second-largest manufacturer of textiles and clothing globally.
It also accounts for 5 percent of textiles and apparel in global trade.
The production share is expected to go up with the scheme. In addition, the government has also proposed other initiatives, like a National Technical Textiles Mission, which will be at an estimated outlay of Rs. 1,480 crore (USD 211.76 million).
Further, policies like the Amended Technology Up-gradation Fund Scheme (A-TUFS) are expected to enable investment worth Rs. 95,000 crore (USD 14.17 billion) by 2022.
The Production Linked Incentive (PLI) scheme aims to achieve several objectives.
· The scheme will incentivize companies for incremental sales from products manufactured in domestic units.
· It is expected to attract foreign investment in the sector and encourage domestic producers to expand their units.
· There will be an incentive that equals 11 percent of investments more than Rs. 500 crore to greenfield projects for big companies in technical textiles.
· Companies that clock annual sales of Rs. 100-500 crores will get a 9 percent incentive for brownfield projects.
· For firms with annual sales of Rs. 500 crore or more, an incentive of 7% will be granted in the first year if turnover is raised by 50% and by 25 percent in subsequent years.
· To ensure that the scheme is a success, the government has planned to launch 7 mega textile parks in the next three years.
· The parks would be set up over 1,000 acres of land with world-class infrastructure and plug-and-play facilities.
· There is a prospect of adding integrated facilities that have a quick turnaround to reduce transportation time.
· Further, the facilities include uninterrupted water and power supply, common utilities, and research and development labs.