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.

    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.

    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. 

    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 Fiber 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?
      • Currently, Indian production and export of textile and clothing products are largely cotton based.
      • In 2018-­19, while Indian textile and clothing exports amounted to about $36 billion, less than one third was man-made fibre ­based
      • Annual textile and clothing exports have remained largely stagnant over the last seven years
      • India is ranked sixth in the global trade in this sector
    • Competitors:
      • In recent years, Bangladesh and Vietnam have gained a sizeable share in the man-made fibre segment of the global textile trade

    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.

    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