The Union Government has approved Production Linked Incentive (PLI) Scheme for Textiles.  This move is a part of the overall announcement of PLI Schemes for 13 sectors made earlier during the Union Budget 2021-22.

What is PLI Scheme?

• As the name suggests, the scheme provides incentives to companies for enhancing their domestic manufacturing apart from focusing on reducing import bills and improving the cost competitiveness of local goods.
• PLI scheme offers incentives on incremental sales for products manufactured in India.
• The scheme for respective sectors has to be implemented by the concerned ministries and departments.

Criteria laid for the scheme

• Eligibility criteria for businesses under the PLI scheme vary based on the sector approved under the scheme.
• For instance, the eligibility for telecom units is subject to the achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods.
• The minimum investment threshold for MSME is Rs 10 crore and Rs 100 crores for others.
• Under food processing, SMEs and others must hold over 50 per cent of the stock of their subsidiaries, if any.
• On the other hand, for businesses under pharmaceuticals, the project has to be a greenfield project while the net worth of the company should not be less than 30 per cent of the total committed investment.

What are the incentives involved?

• An incentive of 4-6 per cent was offered last year on mobile and electronic components manufacturers such as resistors, transistors, diodes, etc.
• Similarly, 10 percent incentives were offered for six years (FY22-27) of the scheme for the food processing industry.
• For white goods too, the incentive of 4-6 per cent on incremental sales of goods manufactured in India for a period of five years was offered to companies engaged in the manufacturing of air conditioners and LED lights.

What is in the box for Textiles?

• The PLI scheme for textiles aims to promote the production of high value Man-Made Fibre (MMF) fabrics, garments and technical textiles.
• Any person or company willing to invest a minimum of Rs 300 crore in plant, machinery, equipment and civil works (excluding land and administrative building cost) to produce products of MMF fabrics, garments and products of technical textiles will be eligible.
• Investors willing to spend a minimum of Rs 100 crore under the same conditions shall be eligible.

Benefits offered

• PLI scheme for Textiles will promote production of high value MMF Fabric, Garments and Technical Textiles in country.
• The incentive structure has been so formulated that the industry will be encouraged to invest in fresh capacities in these segments.
• This will give a major push to the growing high-value MMF segment which will complement the efforts of the cotton and other natural fiber-based textiles industry.
• This will help to generate new opportunities for employment and trade, resultantly helping India regain its historical dominant status in global textiles trade.

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Back2Basics: India’s textile sector

• The textile industry in India traditionally, after agriculture, is the only industry that has generated huge employment for both skilled and unskilled labour.
• The domestic textiles and apparel industry contributes 5% to India’s GDP, 7% of industry output in value terms, and 12% of the country’s export earnings.
• The textile industry continues to be the second-largest employment generating sector in India. It offers direct employment to over 35 million in the country.
• India is first in global jute production and shares 63% of the global textile and garment market. India is second in global textile manufacturing and also second in silk and cotton production.
• 100% FDI is allowed via automatic route in textile sector.

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