Begining of Applications for Production Linked Scheme for Textiles

Context 

The Ministry of Textiles will accept applications from January 1 for the Production Linked Scheme for Textiles.

• It was announced in September 2021.

About Production Linked Scheme for Textiles

• The government approved the Production Linked Incentive (PLI) Scheme for Textiles with a budgetary outlay of ?10,683 crores over a five-year period to promote the production of manmade fibre apparel, manmade fibre fabrics, and technical textile products. With this, India is poised to regain its dominance in the Global Textiles Trade.
• The participants are eligible to apply for other schemes of the Central and State governments. 
  • Foreign (non-resident) investment in the participant’s company should be in compliance with the norms of the consolidated FDI Policy 2020

• Features 
  • 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. 
• 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. 

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.

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.

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