The Union cabinet recently approved the Production Linked Incentive (PLI) scheme for the textile sector. Notably, the PLI scheme for Textiles is a part of the larger announcement of PLI schemes for 13 sectors that was made during the Union Budget 2021-22, committing an outlay of Rs. 1.97 lakh crore.
Introduction to the PLI Scheme
In a bid to boost domestic manufacturing and reduce import bills, the Union government introduced the PLI scheme in March 2020. The scheme provides companies with incentives based on incremental sales from domestically manufactured products.
The program not only invites foreign companies to open businesses in India but also encourages local companies to establish new or expand existing manufacturing units. Besides textiles, the scheme is also applicable to other sectors including automobiles, pharmaceuticals, IT hardware such as laptops, mobile phones and telecom equipment, white goods, chemical cells, and food processing.
Characteristics of PLI for the Textile Sector
The PLI scheme for the textile sector aims to promote the production of high-value Man-Made Fibre (MMF) fabrics, garments, and technical textiles.
Under this scheme, incentives worth Rs 10,683 crore will be provided for production in the sector for five years. These incentives are provided in two phases; in the first phase, any individual or company willing to invest a minimum of Rs 300 crore in plant, machinery, equipment, and civil works (excluding land and administrative building cost) to produce MMF fabrics, garments, and technical textile products can participate.
In the second phase, investors willing to make a minimum expenditure of Rs 100 crore under the same conditions as the first phase can apply.
Anticipated Benefits from the Scheme
The scheme is likely to result in an increase in investment and employment. It is expected to lead to fresh investments of over Rs.19,000 crore, deliver a cumulative turnover of over Rs. 3 lakh crore and create more than 7.5 lakh jobs in the textile sector. Additionally, it is anticipated to generate several lakh more jobs in supporting activities.
Furthermore, the textile industry is predominantly women-driven, so this scheme will empower women and augment their participation in the formal economy.
Priority to Backward Areas
The scheme places priority on investments in Aspirational Districts, Tier 3, Tier 4 towns, and rural areas. Therefore, industries will be incentivized to move to these backward areas. This will particularly impact states like Gujarat, UP, Maharashtra, Tamil Nadu, Punjab, AP, Telangana, Odisha, among others.
About the Textile Industry
The textile and garment industry, being labour-intensive, employs 45 million people in India, making it second only to the agriculture sector in terms of employment.
This industry, one of the oldest in the Indian economy, carries historical skills, heritage, and culture. It comprises two segments: the unorganized sector which is small-scale and uses traditional tools and methods (handloom, handicrafts, and sericulture or silk production) and the organized sector which uses modern machinery and techniques, encompassing spinning, apparel, and garments.
