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Post at: Sep 21 2021

Production Linked Incentive (PLI) Scheme for Textiles

Recent Context

  • On September 8, 2021, the Union Cabinet approved a ₹10,683 crore Production Linked Incentive (PLI) scheme for the textile sector.
  • The government has designed the scheme with a view to providing a big fillip to the man-made fibres and technical textiles segments of the industry.

About the Scheme

  • The scheme is aimed at promoting 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 two years, and the incentive will be paid for five years after the first year of post-investment operation. 

  • The first entails a minimum of ₹300 crore in plant, machinery, equipment and civil works in a unit that must register a minimum turnover of ₹600 crore once it commences operation. 
  • The second is for a minimum of ₹100 crore, where the business achieves a minimum turnover of ₹200 crore. 
  • The incentive is based on a combination of investment and turnover.

Focus of the Scheme

  • The scheme focuses on the man-made fibre segment to enable the Indian textile and clothing sector to regain its dominant status in the global textiles trade.
  • Currently, Indian production and export of textile and clothing products are largely cotton.

How will it impact traditional textiles such as jute?

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

Will the scheme help lower dependence on imports?

  • During 2018-19, the import of man-made fibre garments rose 39% from the previous year, while the import of the man-made fibre yarn, fabrics, and made-ups rose 16%. 
  • The government recently removing the anti-dumping duty on viscose staple fibre and Purified Terephthalic Acid, most man-made fibre is now available in India at internationally competitive prices. 
  • With an incentive to invest in production too, Indian manufacturing of man-made fibre value-added products is expected to increase and thus bring down imports, especially of man-made fibre apparel and fabrics, from countries such as China and Bangladesh.

What lies ahead?

  • As per government the scheme will help attract ₹19,000 crore of fresh investments and generate 7.5 lakh jobs.
  • The expectation is that it will motivate industries to make fresh investments in the select product lines and scale up capacities. 
  • Global retail brands, which are present in India and sourcing man-made fibre-based apparel from other countries, are likely to start sourcing from India once the garments become available at internationally competitive prices.

Status of Textile Industry

  • The Indian textile industry is the second largest producer of MMF Fibre after China.
  • India is the 6th largest exporter of Textiles & Apparel in the world. 
  • India’s textiles and clothing industry is one of the mainstays of the national economy. 
  • The share of textile and apparel (T&A) including handicrafts in India’s total exports stands at a significant 11.8% in 2019- 20.
  • India has a share of 5% of the global trade in textiles and apparel.
  • Major textile and apparel export destinations for India are EU-28 and USA with 50% share in total textile and apparel exports. 
  • It provides direct employment of over 45 million people and source of livelihood for over 100 million people indirectly, including a large number of women and rural population.

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