The government is weighing the option of relaxing eligibility norms for the Production Linked Incentive (PLI) scheme for textiles to enable more players to qualify for benefits and ensure fuller utilisation of the allocated funds for incentivising manufacturing in the country, according to sources.

“The mandatory requirement for applicants to form a new company to qualify for benefits may be re-considered, both for the existing PLI scheme for textiles and the proposed second edition under discussions, as it has proved to be an irritant for some investors,” a source tracking the matter told businessline.

Investors may be given options such as putting up a separate production facility, including a separate building with new plant and machinery, within the complex of an existing company, for producing items under the PLI scheme. These options are being discussed, the source added.

“Allowing such an arrangement will take care of applicant’s concern of spending more time, money and effort in registering a new company. At the same time, the production facility will be new, which will be put up with new investments flowing into the PLI scheme,” the source said.

Additionally, in the second edition of the PLI scheme, flexibilities are also being considered in the form of reduced threshold limits for investments and turnover and extension of benefits to clothing made of all fabrics including cotton.

Proposed investment

The notification for the existing PLI scheme, with a corpus of ₹10,683 crore and focus on manmade fiber and technical textiles, was issued on September 24, 2021.

So far, 64 applications, with a proposed investment of ₹19,798 crore and projected turnover of ₹ 1,93,926 crore, have been approved. Letters of approval have been sent to 56 selected participants after fulfilling the mandatory requirement of creation of new company.

“The investments to be brought in by the approved applicants and their estimated turnover will not be enough for the utilisation of the entire ₹10,683 crore allocated for incentives.That is why a need has been felt for a second edition of the scheme with lower thresholds, and a wider product base, to allow smaller players to come in, ” the source said.

So far, disbursals have been low, at ₹2,875 crore, under the government’s ₹1.97 lakh crore PLI scheme for fourteen sectors announced in 2020. Only eight sectors have received incentive disbursals, the largest share going to electronics manufacturing, with six sectors, including textiles, yet to open