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PLI scheme for textiles:

GS Paper 2

Topics Covered: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

 

Context:

The Union Cabinet has approved a Production-Linked Incentive (PLI) scheme for the textiles sector worth Rs 10,683 crore.

  • This is part of a larger PLI scheme for 13 sectors, with a total budgetary outlay of 1.97 lakh crore.

 

What is the PLI scheme?

As the name suggests, PLI is a way to reward increased production in a specified sector, and has ramifications for economic growth and job creation.

  • The production-linked incentive for textiles is aimed at expanding MMFs and technical textiles’ value chain. The objective of the scheme is to help India gain a dominant status in the global textile trade.

 

Which segments will the new PLI scheme promote?

The PLI scheme for textiles aims to promote the production of high value Man-Made Fibre (MMF) fabrics, garments and technical textiles.

 

Eligible producers:

  1. 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 to participate in the first part of the scheme.
  2. Investors willing to spend a minimum of Rs 100 crore under the same conditions shall be eligible to apply in the second part of the scheme.

 

Provisions of the PLI scheme:

  1. Under PLI, the Centre will subsidise eligible manufacturers by paying incentives on incremental production.
  2. Companies investing over Rs 300 crore in plant, machinery, equipment and civil works to produce the identified products will get an incentive of 15 percent of their turnover, which needs to be Rs 600 crore in the third year.
  3. The companies investing between Rs 100 crore and Rs 300 crore will also be eligible to receive duty refunds and incentives (lower than 15 percent of their turnover).
  4. The government expects to achieve “fresh investment of over Rs 19,000 crore and a cumulative turnover of more than Rs 3 lakh crore”.

 

Benefits:

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 Atmanirbhar Bharat. It will also help attract more investment into this sector.

 

Significance of the scheme:

Two-thirds of international trade in textiles is of man-made and technical textiles. This scheme has been approved so India can also contribute to the ecosystem of fabrics and garments made of MMF.

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Sources: Indian Express.