Policy

Textile Ministry reconsidering list of eligible products for PLI scheme

Amiti Sen New Delhi | Updated on June 07, 2021

For greenfield projects, a minimum investment of ₹500 crore was reportedly proposed with incentives at 11 per cent to start with   -  Arunangsu Roy Chowdhury

May include inputs such as fabric, fibre, filaments to ensure greater value addition

The Textile Ministry is re-considering the products shortlisted so far for qualification under the production-linked incentive (PLI) scheme for the textiles sector and is looking at including inputs such as fabrics and filaments in both the man-made fibre (MMF) and technical textiles categories to incentivise more value addition in the country.

“So far mostly end products have been considered for the PLI scheme both for the MMF and technical textiles categories. These include items such as garments, sweaters, diapers and sanitary napkins. However, it has been pointed out by the industry and experts that just including end products may not optimally encourage manufacturing and investments. It is also important to include inputs such as fabrics and filaments used for making the end product to give a boost to investments and production,” a person tracking the matter told BusinessLine.

Enhancing exports

Textiles is one of the 13 sectors for which the Centre has announced the PLI scheme to enhance India’s manufacturing capabilities and exports. The textile sector has been allocated ₹10,683 crore under the scheme which, as per initial plans of the Ministry, will be offered for incremental production in 40 identified man-made fibre items and 10 technical textiles products over five years.

“The Textile Ministry is now taking a re-look at the scheme to finalise the list of items that would be eligible and is considering the option of including fabrics, fibres and filaments in the revised list,” the official added.

A lot of work has already gone into the reconsideration and whatever the decision might be on new products, the Textile Ministry is expected to notify the scheme soon, the official said.

There is also a demand from the industry to lower the turnover threshold for eligibility under the scheme to include smaller players as well. As per the initial plans, for brownfield companies (companies already in operation) the incentive rates were reportedly proposed to be fixed at 9 per cent of turnover in the first year for companies with a turnover of ₹100-500 crore (for 50 per cent incremental turnover) and 7 per cent for those above that. In the subsequent four years it would keep decreasing.

Greenfield projects

For greenfield projects (new set-ups), a minimum investment of ₹500 crore was reportedly proposed with incentives at 11 per cent to start with, the source said.

However, the industry has pointed out that it may be difficult for most companies to meet the ₹500 crore criteria as most companies in India do not invest in the entire value chain such as from yarn to garments and, therefore, the threshold needed to be lowered.

Also read: PLI norms issued for AC, LED component makers

The Textile Ministry is also taking a re-look at the condition of achieving 50 per cent growth on a year-to-year basis as the industry pointed out that is ambitious and difficult to achieve.

“The PLI scheme has to fit in with what the needs of the industry and the market conditions are. It is better for the government to take some time and get it exactly right,” the official said.

Published on June 07, 2021

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