India: A reviewal is up for investment limits as the textile industry demands to lower the turnover and investment thresholds, and include cotton-based products in a Rs 10,683-crore production-linked incentive (PLI) scheme. This scheme only caters to the technical textiles and apparel made of man-made fibre.
The PLI scheme was brough to light through a discussion in a webinar addressed by Prime Minister Narendra Modi. The senior executives of the industry shed light on the limited financial muscle of an overwhelming large percentage of companies in the labour-intensive sector, especially in the wake of the Covid-19 pandemic, to seek a relaxation of the “rigid criteria”, sources said.
According to the draft “focus product incentive scheme”, reviewed by FE, the government has proposed to offer as much as 11% incentive to large companies for investments over Rs 500 crore in greenfield projects in technical textiles. The benefit, however, is linked to an incremental turnover of Rs 1,500 crore in the first year and a 25% rise in turnover each year after that.
The draft PLI scheme marks a paradigm shift in the government’s decision-making on two counts. First, it earmarks big bucks for big companies, shedding its long and costly bias towards small businesses. Second, it seeks to correct India’s historical policy preference for a cotton-dominated value chain, which is contrary to the global trend. The idea is to reclaim India’s export markets after ceding substantial ground to Bangladesh and Vietnam in recent years.
