Economy

Amiti Sen | New Delhi, May 12 | Updated on: May 12, 2022

Textile Ministry still working on the contours of the scheme; no final decision taken yet on coverage

The Production Linked Incentive (PLI) 2.0 for the textile industry may have a lowered minimum investment and turnover criteria if restricted to garments and apparel. Discussions at the Textile Ministry on the possible scope of the proposed second edition of the PLI scheme for textiles hint at a distinct possibility of it being restricted to garments and apparel because of the high employment generation prospects in this sector.

“The specifics of the second edition of the PLI scheme, including the product coverage, are still being finalised. Restricting the scheme to garments and apparel is being seriously considered as it is where employment generation is at its maximum. If that happens, then the minimum investment requirement could be brought down to ₹40–50 crore, while the minimum turnover requirement could be about ₹100 crore. But the matter is still under discussion, “an official tracking the development told BusinessLine.

The Textile Ministry has so far approved 64 applications under the scheme with a proposed total investment of ₹19,798 crore and a projected turnover of ₹1,93,926 crore. As the budget for incentives under the scheme, fixed at ₹10,683 crore, is more than what would be utilised as pay-outs to the 64 short-listed investors, the excess of about ₹4,000 crore can be utilised as incentives under PLI 2.0. 

PLI scheme

The PLI scheme for textiles, in its existing form, is divided into two parts and is available for the production of man-made fibre (MMF) fabrics and apparels as well as technical textiles. The first part of the scheme requires a minimum investment of ₹300 crore and a minimum turnover of ₹600 crore. Investors are entitled to an incentive of 15 per cent of the minimum turnover in the first year, which would go down by 1 per cent over the next four years. Part two requires a minimum investment of ₹100 crore, resulting in a minimum turnover of ₹200 crore. The incentive here is lower at 11 per cent in the first year, which would be reduced by 1 per cent over the next four years.

“A majority of the 64 proposals that have been approved so far are under part two, where the minimum investment and turnover criteria is lower. To ensure participation of a larger number of garment and apparel manufacturers, it would certainly need to be brought down further,” the official said.

Manufacturing of garments is not very capital intensive, unlike other kinds of textiles such as technical textiles or integrated value chains where weaving, spinning, and processing have to be undertaken. But garmenting and apparel is not very capital intensive, the official explained.

“Basically, you have to make a shed or a building and put the sewing machine there. Typically, a thousand machines should cost around ₹40 crore. So, the minimum investment limit for the scheme should not be over ₹40-50 crore. Since the ratio of investment to turnover for garments is relatively better, the minimum turnover requirement could be ₹100 crore,” the official said.

The PLI schemes announced by the Centre across 14 sectors have the potential to generate at least 60 lakh new job opportunities, according to the Finance Ministry.

Published on May 12, 2022