The Textile Ministry is taking a re-look at the proposed parameters of the Production Linked Incentive (PLI) scheme for the sector as some in the industry has complained that the minimum turnover suggested for qualifying for the scheme is too high and would exclude many, sources have said.
“Industry players have approached the Textile Ministry and sought a lowering of the turnover threshold for the scheme as they say that even the smaller players should be eligible for the benefits. The Ministry has noted the concern and is deliberating if some changes could be made in the proposed parameters,” an industry source told BusinessLine.
The PLI scheme was launched for the textiles sector (man-made fibre segment and technical textiles) in November 2020 when the Union Cabinet cleared the proposal for ten sectors which also included pharmaceuticals, automobiles and auto components, telecom and networking products, advanced chemistry cell batteries, food products, solar modules, white goods, and speciality steel.
The textile sector has been allocated ₹10,683 crore under the scheme which, as per proposed plans of the Ministry, will be offered for incremental production in 40 identified man-made fibre items and 10 technical textiles products. The idea behind the PLI scheme is to promote domestic manufacturing, for both sales within the country and exports, by providing financial incentives on incremental turnover for five years.
“While the rates of incentive to be offered to the textiles sector linked to incremental production are set to be one of the highest amongst the existing sectors, some in the industry are of the view that it would be of limited advantage if most units get excluded,” the source said.
Incentive rates
For brownfield companies (companies already in operation) the incentive rates are proposed to be fixed at 9 per cent of turnover in the first year for companies with a turnover of ₹100-500 crore (for 50 per cent incremental turnover) and 7 per cent for those above that. In the subsequent four years it would keep tapering.
For greenfield projects (new set-ups), a minimum investment of ₹500 crore has been proposed with incentives at 11 per cent to start with, the source said.
“But now that there is a demand to make the scheme more inclusive by lowering the turnover threshold for eligibility, some thought in the Ministry is going into that,” the source added.
Recently, the Union Cabinet approved the detailed PLI schemes for the pharmaceuticals sector and IT hardware. To accommodate smaller players in the pharmaceuticals sector, a sub-category for MSME was created in the lowest threshold with a small portion of the total funds to be allocated to it.