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The Textile Ministry will hold stakeholder consultations with representatives of industry on the draft guidelines of the production linked incentive (PLI) scheme before it calls for applications from investors.
The industry is continuing to press for further expansion to the list of eligible items and lowering of the minimum investment and turnover requirements, but it may be difficult for the government to do so, a source tracking the matter has said.
“Some in the industry have demanded that certain items be added to the list of eligible items under the scheme. That may not happen as the list was finalised after detailed consultations. There are also some calls for lowering of turnover threshold so that smaller players can qualify, but doing that would be difficult too as Cabinet nod for the same has been obtained,” the source told BusinessLine.
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The areas that may be open to discussion include the criteria for grading the applications for selection of an applicant, the details on how incremental investments and turnover would be calculated, and the concept of a ‘dies-non year’ when an investor is not able to meet the investment or turnover criteria in a particular year, the source said.
In September, the Union Cabinet cleared the much-awaited ₹10,683 crore PLI scheme for the textile industry, with incentives for identified items from the MMF (man-made fibre) and the technical textiles sectors over a period of five years.
While the list of eligible items was expanded after discussion with the industry to include 15 lines of MMF fabric in addition to 40 MMF apparel products and 10 technical textiles segments, there were not many changes in the threshold criteria for investment and turnover.
High threshold remains
The PLI scheme is divided into two parts. In the first part, minimum investment required is ₹300 crore attracting higher incentives, while in the second, the minimum investment is ₹100 crore with relatively lower incentives.
“During the formulation of the scheme, the industry had proposed that the minimum investment requirement of ₹100 crore should be lowered further as many MSMEs got left out due to the high threshold. While the government brought down the higher criteria of ₹500 crore at the upper end of the scheme to ₹300 crore, it did not lower the ₹100 crore threshold. Hence entry for smaller players remains blocked,” a Delhi-based garments manufacturer and exporter said.
Also see: Textile Ministry proposes grading system to select entities for PLI benefits
If the government wants the PLI scheme to increase employment generation and push exports, the smaller players should also be allowed to participate as the MSME sector contributes significantly to both employment and exports, the garments manufacturer added.
Point-based system
In the draft guidelines, the Ministry has suggested a point-based system with criteria including employment generation, location, financial and technological soundness. “There can be discussion with the industry around this criteria,” the source said.
The government has estimated that the PLI scheme will lead to fresh investment of more than ₹19,000 crore, a cumulative turnover of over ₹3-lakh crore, additional direct employment to 7.5 lakh and indirect employment to several lakhs.