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The Textile Ministry is considering imposition of a minimum value-addition criteria of 60 per cent for garment manufacturing, spinning and weaving activities, and a lower 30 per cent requirement for processing for industry to qualify for the ₹10,683-crore Performance Linked Incentive (PLI) scheme for textile products, according to officials tracking the issue.
Additionally, PLI beneficiaries will not be allowed to do outsourcing or opt for job work (getting part of the processing or manufacturing done by independent workers), a source told BusinessLine. “These specifications are likely to be part of the PLI guidelines for textiles that are being worked out,” said the source.
Norms being worked out
The PLI scheme for man-made fibre and technical textiles was approved recently by the Cabinet, but its guidelines are still being formulated by the Textile Ministry in consultation with other Ministries and departments. The value-addition criteria is being included in the scheme to ensure that enough manufacturing takes place locally and leads to the planned employment generation, said the official. In case of processing, the value-addition norm has been kept at 30 per cent since processing has a high throughput (the rate at which a company can produce and sell its good) and value addition is low.
“One processing industry can feed thousands of garment factories. Their margins are small but volumes are more. That is how they make their money. Their value addition is relatively less,” the official explained.
But in case of weaving, spinning or garment making, it is quite feasible and desirable to have value addition of at least 60 per cent. “We know that for these segments value addition can be as much as 100 per cent. However, for some high-volume product, very high value addition may not work out. So, the government is looking at fixing it at 60 per cent,” he added.
According to the Cabinet announcement, to be eligible under the scheme, two types of investments are possible. Any individual, firm or company willing to invest a minimum of ₹300 crore in plant, machinery, equipment and civil works (excluding land and administrative building cost) to produce products of the notified MMF fabrics, garment and products of technical textiles, shall be eligible to apply for participation in first part of the scheme.
In the second part, any individual, firm or company, willing to invest a minimum of ₹100 crore, shall be eligible to apply.
The factories based around aspirational districts or Tier-3 & Tier-4 cities will be given priority. It is especially expected to benefit Gujarat, UP, Maharashtra, Tamil Nadu, Punjab, Andhra Pradesh and Telangana, according to the government.