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Production-Linked Incentive Scheme for Textile Sector

Posted on April 15, 2022 by admin1  721

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Recently,The government approved 61 applications of companies with an investment potential of over Rs 19,000 crore under the production linked incentive (PLI) scheme for textiles.

About PLI Scheme in Textile Sector

  • Government approved PLI Scheme for Textiles products, namely MMF Apparel, MMF Fabrics and Products of Technical Textiles, for enhancing India’s manufacturing capabilities and enhancing exports with an approved financial outlay of Rs 10,683 crore over a five-year period. 
  • Types of Investment : The scheme has two parts
    • Part 1 where minimum investment is Rs. 300 crore and minimum turnover required to be achieved for incentive is Rs.600 crore
    • Part-2, where minimum investment is of Rs. 100 crore and minimum turnover required to be achieved for incentive is Rs. 200 crore. 
  • The investment period is 2 years, and the incentive will be paid for 5 years after the first year of post-investment operation. 
  • Segments 
    • The PLI scheme for textiles aims to promote the production of high value Man-Made Fibre (MMF) fabrics, garments and technical textiles

Why so much importance to Man-made Fibre?

  • Definition:
    • Manmade fibres are made from various chemicals or are regenerated from plant fibres.
    • Examples of manmade fibres are: 
      • Polyester; 
      • Polyamide – (nylon); 
      • Acrylics; 
      • Viscose, made from wood bark; 
      • Kevlar, a high-performance fibre; and 
      • Nomex, a high-performance fibre
  • Importance of Man-made Fibre in World Market:
    • 80% of the total Chinese textile export was man-made fibre ­based.
    • 70% of the total global fibre manufacturing and consumption, 70% is man-made fibre related, while in India it is just about 35%. 
  • Where does India stand?
    • Textile industry is the second largest employment generator in the country, next only to agriculture. In the last decade, close to Rs. 203,000 crores have been invested in this industry with direct and indirect employment of about 105 million people, a major part of which is women.
    •  Despite the industry being deeply affected by the lockdown, it has shown a remarkable recovery with a positive contribution to growth, as reflected by IIP, of 3.6 percent during April- October 2020.

What are Technical Textiles?

  • The Technical Textiles segment is a new age textile, whose application is in several sectors of the economy.
    • They are used in sectors like infrastructure, water, health and hygiene, defence, security, automobiles, aviation, etc. 
  • They improve the efficiencies in those sectors of the economy. 
  • The government has also launched a National Technical Textiles Mission for promoting R&D efforts in technical textiles and their applications. 
  • PLI will help further, in attracting investment in this segment.

Significance 

  • The PLI scheme will provide an immense boost to domestic manufacturing, and prepare the industry for making a big impact in global markets in sync with the spirit of Atma Nirbhar Bharat.
  •  It will also help attract more investment into this sector.
    • The PLI Scheme for Textiles will lead to fresh investment of more than Rs.19,000 crore, cumulative turnover of over Rs.3 lakh crore will be achieved under this scheme and will create additional employment opportunities of more than 7.5 lakh jobs in this sector.
  • The scheme would directly benefit the states of Gujarat, Uttar Pradesh, Maharashtra, Punjab, Tamil Nadu, Andhra Pradesh, Telangana and Odisha, as these were states where the textile sector is already growing. 
  • 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.
  • The scheme will also pave the way for the participation of women in large numbers.

Criticism of the Scheme

  • The scheme will not impact traditional textile segments such as jute or cotton. 
  • Separate schemes will be required for them.
  • It has minimum investment thresholds and select product lines and hence targets a limited number of players.

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.

About Production Linked Incentive (PLI) Scheme

  • The Finance Minister announced the Production Linked Incentive (PLI) Schemes across 13 key sectors.
    • It will create national manufacturing champions and generate employment opportunities for the country’s youth. 
  • The aim is to give companies incentives on incremental sales from products manufactured in domestic units.
  • It also invites foreign companies to set units in India along with encouraging local companies to set up or expand existing manufacturing units.

Source:TH

 
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