The second edition of the production linked incentive (PLI) scheme for textiles may allow some relaxations on the mandatory requirement for applicants to form a new company for production and investments under the programme, sources have said.

However, the Textiles Ministry is unlikely to allow any flexibilities under the first edition of the PLI scheme, already under implementation, despite some applicants arguing that setting up a new company would increase their operating costs, a source told businessline.

“There are a couple of applicants, amongst those who received their initial approval for the scheme, who expressed their unwillingness to set up a new company as they already have operations in the country. Their arguments were looked into, but the government is not ready to make changes to the existing scheme in the first phase,” the source said.

The PLI scheme for textiles was introduced in 2021, with an outlay of ₹10,683 crore, to promote the production of man-made fibre (MMF) fabrics and apparels as well as technical textiles. Of the total 67 applications received under it (the first edition of the scheme), 64 applicants were selected, and letters of approval were sent to 55 selected participants till October 2022. Investments of over ₹1,536 crore have already been made, per government estimates.

Minimum investment

While for the first edition of the PLI scheme, the minimum investment requirement (₹300 crore for part-one and ₹100 crore for part- two) and turnover requirement (₹600 crore for part-one and ₹200 crore for part-two), was high, the Textile Ministry is likely to bring it down considerably for the second edition of the scheme.

“The minimum investment requirement for getting various levels of incentives is likely to be much lower in the second edition of the PLI scheme with three different thresholds of ₹15 crore, ₹30 crore and ₹45 crore under consideration with double turnover requirement,” an industry source said. The second edition of the PLI scheme is likely to be available for cotton items as well and not just be restricted to MMF and technical textiles.

However, the incentives offered under the second edition of the PLI scheme for textiles is also likely to be lower than under the first edition. The high levels of incentives under the first edition of the PLI, which ranges between 11 per cent and 15 per cent in the first year (to be reduced by 1 per cent over the remaining four years), would also serve to ensure that applicants who have committed to invest under the scheme would not withdraw and migrate to the second edition, the official added.