Production-Linked Incentive Scheme for Textile Sector

In News

• The Government has approved the Production Linked Incentive (PLI) Scheme for Textiles with a budgetary outlay of Rs. 10,683 crore. 
  • The scheme has been designed with a view to providing a big fillip to the man-made fibres and technical textiles segments of the industry.
  • With this, India is poised to regain its dominance in the Global Textiles Trade.

Details of the PLI Scheme in Textile Sector

• Aim  of the Scheme:
  • To promote industries that invest in the production of 64 select products.
  • The product lines include
    • 40 in man-made fibre apparel, 
    • 14 in man-made fibre fabrics, and 
    • 10 technical textile segments/products. 
• The investment period is 2 years, and the incentive will be paid for 5 years after the first year of post-investment operation. 
• The scheme is for two types of investments. 
  • The first entails a minimum of ?300 crores in plant, machinery, equipment and civil works in a unit.
    • The unit must register a minimum turnover of ?600 crores once it commences operation.
  • The second is for a minimum of ?100 crore, where the business achieves a minimum turnover of ?200 crores. 
• Thus, the incentive is based on a combination of investment and turnover.
• Priority will also be given to investment in aspirational districts, Tier­3, Tier­4 towns, and rural areas. 

Expected benefits from the Scheme

• Lower dependence on imports 
  • During 2018­-19, the import of man ­made fibre garments and the man-made fibre yarn and fabrics jumped up significantly.
  • Recently, the government removed the anti-dumping duty on viscose staple fibre and Purified Terephthalic Acid, 
    • This step has made most man-made fibre available in India at internationally competitive prices.
  • With an incentive to invest in production too, Indian manufacturing of man­made fibre value ­added products is expected to increase.
  • Thus, it will bring down imports, especially of man ­made fibre apparel and fabrics, from countries such as China and Bangladesh.
• Leveraging Economies of Scale, the scheme will help Indian companies to emerge as Global Champions in the Textile Sector.
  • It will incentivise the companies to grow more as higher the turnover, more is the incentive.
• Reduce unemployment:
  • It will help in the creation of additional employment of over 7.5 lakh people directly and several lakhs more for supporting activities.
• The scheme will also pave the way for the participation of women in large numbers.
  • As it is evident from the experience of Bangladesh, the Textile and Apparel industry helps in women empowerment.
• New Investment and Production Boom:
  • It is expected that this scheme will result in a fresh investment of above Rs 19,000 crore.
  • It may also result in an additional production turnover of over Rs.3 lakh crore in 5 years.
• Focus on Aspirational Districts:
  • Higher priority for investment in Aspirational Districts & Tier 3/4 towns
  • The scheme will positively impact especially States like Gujarat, UP, Maharashtra, Tamil Nadu, Punjab, AP, Telangana, Odisha etc.

Criticism of the Scheme

• Less or No impact on Traditional Textile Segment
  • The scheme will not impact traditional textile segments such as jute or cotton. 
  • Separate schemes will be required for them.
• Targets Limited Number of Players even in Target Segment
  • It has minimum investment thresholds and select product lines and hence targets a limited number of players.
• Yet to announce the final list
  • The final list of products eligible for the scheme is yet to be notified even 10 months after the proposal.
  • It is expected that most of the top globally traded man-made fibre products in which India’s share is less than 5% will be covered in the final list.

Conclusion and Way Ahead

• The Scheme can give a boost to AtmaNirbhar Bharat and must be quickly rolled out.
  • For this timely rollout of the final list of covered products is required.
• Not covering the traditional segments can ensure focus on exactly where it is required.
  • The sectors like Jute and Cotton have a large number of industries spread across micro, small and medium enterprises and large­ scale operations.
  • They will continue to invest and grow in the fields they are strong in.
  • So for the time being we can focus on Man-made fibres.

Source: TH