Proposed PLI scheme for garments takes backseat over low criteria for investment, turnover: sources

The Textile Ministry’s proposal for a new Production Linked Incentive (PLI) scheme exclusively for the garments and made-ups sector, with lower minimum investment and production criteria, may have been consigned to the back seat for the moment, a source tracking the matter said.

 “The Textiles Ministry had worked hard on the proposed PLI scheme for apparels and made-ups of all materials, including cotton, as there are a large number of producers of garments in the country who could have benefitted from it. But finally what was offered was a PLI 2.0 scheme for textiles that was an absolute copy of the first one, and was restricted to man-made fibre (MMF) and technical textiles with the same investment and turnover criteria as before,” a source tracking the matter said.

The Finance Ministry rejected the proposal for extending the PLI scheme to garments and made-ups of all materials as it did not want to bring down the minimum threshold limits on investments and turnover to the levels suggested by the Textiles Ministry, the source said.

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As the Textiles Ministry recently introduced some flexibilities in rules in the original PLI for textiles scheme, including requirements around setting up a new company and investments, it is hopeful the application window for investors re-opened till August 31 2023 will attract more investments.

The initial PLI scheme for textiles, implemented in September 2021, covered MMF (man made fibre) apparels, MMF fabric, and technical textiles items. The minimum investment criteria was  ₹100 crore and ₹300 crore, for the two parts of the scheme, while minimum turnover  criteria was ₹200 crore and ₹400 crore. 

“The textiles industry had pointed out to the government that garments producers were of smaller scale and the minimum investment and turnover criteria had to be much lower for the proposed new PLI scheme so that MSME sector could also benefit,” the source said.

• Also read: Global brands return to Indian garment market after a lull

For the new scheme, the considerations included three investment thresholds of ₹15 crore, ₹30 crore, and ₹45 crores with double the turnover as the criteria for availing incentives, an industry representative said. The incentives proposed were lesser than that offered under the first PLI scheme

“The Finance Ministry did not approve of the proposed investment and turnover criteria for the new scheme as it thought that it was too low and did not fit with the idea of the PLI scheme,” the source said.

The Textile Ministry had set about working on a new edition of the PLI scheme as there were not enough takers for the first edition that had a corpus of ₹10,683 crore. Per calculations, the 64 candidates selected for the scheme would be eligible for incentives worth ₹6,000 crore over the next five years, leaving a surplus of over ₹4,000 crore.

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