Economy

Production Linked Incentive for textiles may be capped to ensure better distribution

Amiti Sen New Delhi | Updated on January 24, 2021

While minimum turnover for eligibility under the scheme could be ₹100 crore, it need not be for the specific item for which a company wants to claim PLI   -  Arunangsu Roy Chowdhury

The ₹10,683-crore scheme covers 10 technical products, 40 man-made items

The Textile Ministry is likely to impose caps on the incentive that can be claimed by a company under the Production Linked Incentive (PLI) scheme for man-made fibre and technical textiles to ensure that big players do not corner a large part of the funds, according to sources.

“A cap on the maximum amount that can be claimed under the PLI scheme by a textile company is likely to be put in place so that a big player can’t take most of the amount that has been earmarked for the sector and there is a more even distribution,” a person tracking the matter told BusinessLine.

The PLI scheme was launched for 10 sectors in November 2011 to promote domestic manufacturing by providing financial incentives on incremental turnover for five years. The textile sector has been allocated ₹10,683 crore under the scheme which, the Ministry has decided, will be offered for incremental production in 40 identified man-made fibre items and 10 technical textiles products.

“The 40 MMF lines identified for the PLI push are the ones where India’s share in world market is negligible while the 10 technical textile products are the top globally traded lines,” the source said. As soon as the Union Cabinet approves the PLI scheme for the textile sector, which is in the last stages of discussion and finalisation, it will be notified by the Textiles Ministry and the modules for registering interested players will be made, the source said.

According to sources in the industry who have been part of the government’s discussion on the contours of the PLI scheme, the incentive rates offered for the textiles sector is one of the highest (compared to other sectors). It is likely to be fixed at 9 per cent of turnover in the first year for companies with a turnover between ₹100 crore and ₹500 crore and 7 per cent for those above that. In the subsequent four years it would keep tapering.

Eligibility norms

While the minimum turnover for eligibility under the scheme could be ₹100 crore, it need not be for the specific item for which a company wants to claim PLI. “In case a textile company is presently engaged in production of cotton, woollen or jute products but wants to get into a technical textile item that is covered under the PLI scheme, it can be eligible if it meets the minimum turnover criteria through production of the other items. While the incremental production has to be of the item for which PLI is being claimed, the applicant has to maintain the level of turnover of the items it was originally manufacturing,” the source said. To claim incentive under the PLI scheme, the industry will have to get registered with the government. “The eligibility is for both domestic sale and exports as restricting it to exports would make the scheme incompatible at the WTO,” the official said.

Other sectors offered PLI incentives include pharmaceuticals, automobiles and auto components, specialty steel, capital goods, technology products, white goods (ACs and LEDs), telecom and networking products, high-efficiency solar PV modules and advanced battery cells.

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Published on January 24, 2021
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