Context

The Cabinet approved the Production-Linked Incentive (PLI) scheme for the textile sector that is expressly targeted at the man-made fibre (MMF) and technical textiles segments.

Why India needs to focus on Man-made fibre (MMF) in textile trade

• Preference for MMF:  The MMF surpassed cotton as the fibre of choice in the 1990s.
• The MMFs share in worldwide textile consumption is about 75%.
• Dominance of natural fibre in India’s export: India’s textile and clothing exports have continued to remain dominated by cotton and other natural fibre-based products.
• The MMF have contributed less than 30% of the country’s $35.6 billion in overall sectoral exports in 2017-18.
• While policy makers have been cognisant of the need to bolster support for the MMF segment.

About the scheme

• The PLI scheme has a budgeted outlay of ₹10,683 crore.
• Incentive at two levels: The incentives have been categorised into two investment levels.
• First level: Firms investing at least ₹300 crore into plant and machinery over two years would need to hit a minimum turnover of ₹600 crore before becoming eligible to receive the incentive over a five-year period.
• Second level: At a second level an investment of ₹100 crore with a pre-set minimum turnover of ₹200 crore would enable qualification for the incentive.
• Intermediate products included: The aim of the scheme is to specifically focus investment attention on 40 MMF apparel product lines, 14 MMF fabric lines and 10 segments or products of technical textiles.
• The inclusion of intermediate products reflects the Government’s keenness to ensure the scheme ultimately delivers on the broader policy objectives.

Conclusion

Operational success of the scheme is likely to hinge on how new entrepreneurs and existing companies weigh the risk-reward equation, especially at a time when the pandemic-spurred uncertainty has already made private businesses leery of making fresh capital expenditure.

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