Textile Ministry submits re-drafted PLI scheme with wider scope for Cabinet approval

Amiti Sen New Delhi | Updated on July 15, 2021

A customer at a garments shop after further ease in restrictions of COVID-induced lockdown, in Kolkata   -  PTI

Industry demand to add inputs to eligible products list, lower eligibility threshold considered

The Textile Ministry has re-drafted the much-awaited ₹10,683 crore Production Linked Incentive (PLI) scheme for the textile sector, to include a wider range of items with focus on value-addition, and has submitted the fresh Cabinet note for approval after getting a nod from the Expenditure Finance Committee (EFC).

“After consultations with the industry and experts, the Ministry re-drafted the list of items eligible for the PLI scheme to encourage more value addition. Demands to lower the turnover threshold to include smaller players was also considered,” an official tracking the matter told BusinessLine.

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Following inter-ministerial consultations, a Cabinet note was drafted on the recommendation of the EFC and has now been submitted to the Cabinet Secretariat, PMO and Department of Expenditure for approval of the Cabinet.

Focus Product Incentive Scheme

The PLI scheme for the Textile industry is to be implemented through the Focus Product Incentive Scheme which is focussed on creating global champions in man-made fibre (MMF) and technical textiles sectors. The scheme will provide incentive from 3 per cent to 15 per cent on stipulated incremental turnover for a period of five years after one year gestation period for brownfield investment (companies already in operation) and two years gestation period for greenfield investment (new set-ups).

The initial plan of the Textile Ministry was to offer the ₹10,683 crore allocated under the scheme for incremental production in 40 identified MMF apparel items and 10 technical textiles lines over five years.

But the industry and experts pointed out that it was important not to restrict the benefits to end-products such as sweaters, garments, diapers and sanitary napkins but to also extend it to much needed inputs for the industry such as fibre and filaments to encourage value addition in the country.

To be implemented soon

“The re-working of the list of items and considering demands including lowering eligibility threshold took some time. But the scheme is now ready and will be implemented as soon as the Cabinet gives its nod,” the official said.

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As per the initial plans, for brownfield companies 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.

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 industry had complained that the threshold levels were too high and needed to be brought down to include small scale units.

Textiles is one of the 13 sectors for which the Centre has announced the PLI scheme to enhance India’s manufacturing capabilities and exports.

Published on July 15, 2021

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