PLI Scheme for the Textile Sector - Overview and Progress
The Government of India’s PLI (Production Linked Incentive) scheme, announced in the Union Budget 2021-22, is a major step to give a fillip to the Atmanirbhar Bharat Abhiyan and enhance India’s manufacturing capabilities and exports. The scheme presents a financial incentive to boost domestic manufacturing and attract large investments. Moreover, other government initiatives such as India Investment Grid (IIG) Portal have made it easy to connect investors and promoters to improve facilitation, thus creating an ecosystem favouring easier investments.
Beginning with the electronics sector, the PLI Scheme is currently spread across 13 key sectors, with an outlay of INR 1.97 lakh crores[i]. The textile industry, which is the second largest employer[ii] in India, accounts for ~2% of GDP[iii] and contributes to ~15% of export earnings[iv]. In the PLI Scheme for Textile Sector, incentives worth INR 10,683 crores will be provided over five years for manufacturing notified products of MMF Apparel, MMF Fabrics, and segments/products of Technical Textiles in India[v].
India, with its unique position of having the entire value chain for textile production present within the country, is ideally placed vis-à-vis other competing nations which must import fibre, yarn, and fabric to meet their requirement for garment production. The domestic textile and apparel production is approx US$ 140 bn including US$ 40 bn of Textiles and Apparel export.[vi]
With the PLI scheme, production and export are set to further improve as the scheme will attract large investment in the sector to further boost domestic manufacturing, especially in the MMF segment and technical textiles. In the wake of the pandemic, this gains further importance as producers looking to move from major producing Asian nations like China, find India an attractive destination. Industry experts estimate that pocketing even 1% of the market share from China means getting a US$ 10 bn opportunity for India[vii].
The PLI Scheme for the textile sector has two parts. In Part 1, the minimum investment is INR 300 crore and the minimum turnover required to be achieved for incentive is INR 600 crore; and in Part 2, the minimum investment is INR 100 crore and minimum turnover required to be achieved for incentive is INR 200 crore[viii].
Moreover, the scheme proposes that factories based around aspirational districts or Tier-3 & Tier-4 cities will be given priority, which will especially benefit states like Gujarat, Uttar Pradesh, Maharashtra, Tamil Nadu, Punjab, Andhra Pradesh, and Telangana[ix].
A look at the progress of the scheme till now shows that over the period of five years, the PLI Scheme for Textiles will lead to fresh investment of more than INR 19,000 crore, cumulative turnover of over INR 3 lakh crore and will create an additional 7.5 lakh jobs in this sector[x]. The textile industry predominantly employs women; therefore, the scheme holds potential for female empowerment and increasing the participation of women in the formal economy.
With its focus on the high-value expanding sectors like MMF and Technical Textiles, the PLI Scheme for Textiles is set to generate new opportunities for employment and trade; in turn, helping to create 50-60 global champions of export.