BENEFITS BIGS PLAYERS ONLY NOT MSME’S FEELS INDUSTRY
Ever since the news of PLI scheme being approved by the Government started dispersing the reaction of apparel exporters from all corners of the country started coming in.
While many exporters shared their concern about the limitation of scheme in being only beneficial to big players who can invest amount from Rs 100 cr to Rs 300 cr; few were happy about the scheme because of the long- term benefits.
Every coin has two sides and the PLI Scheme is no different.
Firstly, the scheme is mainly for technical textiles, Man-Made Fibre and only the big textile companies who are willing to invest in the textile will reap benefits.
Secondly, garment exporters will not be major beneficiaries as most of them fall under the MSME category and will not be able to invest a high capex of Rs 100 cr.
According to the scheme 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.
However, the scheme will be very favourable for companies that are into production of man-made fibres like Reliance Industries, Aditya Birla Group and even companies engaged in production of technical textiles.
The government is also considering Cotton-based products.
The biggest advantage will be that it would encourage some new players/investors to enter the textile segment who will invest in man and machine and in turn create employment opportunities.
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 and, will create additional employment opportunities of more than 7.5 lakh jobs in this sector and several lakhs more for supporting activities.
For a long time now there is hardly any new investor or player seen in the textile segment.
While on the contrary India is a hot cake for many national and international companies looking to acquire start- ups and invest big bucks in the Indian Inc. the textile and apparel sector has definitely missed on this opportunity.
When Team PERFECT SOURCING spoke to Ex- Chairman AEPC and Managing Director of Jyoti Apparels he explained,” Though directly the scheme is not offering much but indirectly it will be beneficial.”He further explained, “The step will boost investment in the sector, bring the cost of Man-Made Fibres down as it will be produced in India and players will not lose money by paying high import duties. All this will ultimately help apparel exporters who lose a lot of business to countries like China and Vietnam who have good market hold and share in MMF garments.”
The global market for MMF garments is $500 billion including $170 billion for sportswear.
Share of MMF garments in India’s total apparel exports is only $ 1.6 billion, hardly 10 per cent, whereas the world trade in MMF garments is to the tune of $ 200 billion.
Indian apparel sector, which is pre-dominantly cotton-based, can aspire to multiply its MMF apparel exports by more than 12 times to about $20 billion with some hard work, say experts.
The government’s fiscal stimulus of INR 10,683 crore under the Production Linked Incentive (PLI) for the textile sector, mainly in MMF segment and technical textiles, is likely to encourage production of MMF garments.
Once the MMF production goes up in the country and dependency on imports gets less, exporters will able to manufacture and export garments made of MMF along with cotton and the lean season which affects the sector between April and June will disappear slowly.
Cotton is losing its dominance due to efficiency, cost and availability of man-made fibers and increased depends on MMF and enhanced production will be a good solution in the long term.
Excellent move by the Government and we highly appreciate the step. This will boost MMF apparel exports from India and will generate the much needed employment making India competitive in the world market. Our Commerce and Textile minster has really supported our industry and with him at the helm, apparel exports will just grow upwards. This is the beginning. Going forward I am sure the government will include all exporters in such schemes for overall development of the sector.
ASHOK G RAJANI, MIDAS TOUCH EXPORT, MUMBAI
The step will boost investment in the sector, bring the cost of Man-Made Fibres down as it will be produced in India and players will not lose money in importing duties. All this will ultimately help apparel exporters who lose a lot of business to countries like China and Vietnam who have good market hold and share in MMF garments.
HKL MAGU, MD, JYOTI APPARELS EX-CHAIRMAN AEPC
It is a very good announcement and will help gig units to scale up using this incentive program. Further, it gives an exclusive push to MMF products which has an enormous scope for India especially for the exports segment.
Only concern here is that this type of investment push incentive needs to be given to MSMEs’also who are mainly into cotton and MMF RMG products with the bench marking a minimum unit price for eligibility and with a reachable increase of turnover level.
RAJA M SHAMUGHAM, President, Tirupur Exporters Association (TEA)
This scheme is a great step in the direction of creating ecosystem for man-made garments. The scheme however benefits only a few people from the apparel industry who have the ability to invest Rs300 Cr in new plant and machinery. Major textile players will be able to invest and reap benefits. Since almost 90% of garment exporters are in MSME’sthey will get no direct advantage of this scheme
ANIMESH SAXENA, MD, NETEE CLOTHING
The scheme will be beneficial for big exporters who can invest capital of Rs 100 cr. For small and medium sized exporters of garments this is not going to make much difference.
Ravi Poddar, MD, Cheer Sagar