Union Textiles Minister Piyush Goyal will soon review production-linked incentive (PLI) scheme for products made of man-made fibre and technical textiles, amidst clamour for reducing the lofty turnover and investment targets for companies to avail of benefits.
The scheme is worth Rs. 10,683 crore.
As per a report of leading business daily Financial Express, MoT faces a tough task, as the labour-intensive garment sector, comprising mainly MSMEs and dominated by cotton-based players, also wants the inclusion of value-added cotton products in the scheme to benefit a large number of businesses.
On the other hand, demands go against the Government’s intent of luring mainly large companies to create few champions in key sectors through various PLI schemes.
In textiles and garments, it also seeks to correct India’s historical policy bias towards cotton-based value chain that is, in fact, contrary to the global consumption pattern.
It is pertinent to mention here that as per the draft PLI scheme floated earlier, MoT proposed incentives in the range of 7-11 per cent in the first year. But only those firms with annual turnover of at least Rs. 100 crore were to make the cut.
The benefits in all categories were proposed be reduced by 100 basis points each year after the first year and granted for a total of five years from FY22.
The draft pledged as much as 11 per cent incentive to large companies for investments over Rs. 500 crore in greenfield projects in technical textiles.
The benefit, however, was linked to an incremental turnover of Rs. 1,500 crore in the first year and a 25 per cent rise in turnover each year after that.
It also suggested that firms with an annual turnover of Rs. 100-500 crore will be eligible for an incentive of 9 per cent for brownfield projects. This will be subject to an increase in turnover by 50 per cent each year.
Similarly, companies with a turnover of Rs. 500 crore or more were to be granted a 7 per cent incentive in the first year. The benefit was tied to the condition that turnover has to be raised by 50 per cent in the first year and by 25 per cent each year after that.
The incentives were proposed to be extended for incremental production in 50 laggard categories (40 man-made-fibre-based garments and 10 technical textiles).
Some players, who are struggling to cope with a Covid-induced liquidity squeeze, want the rollout of the scheme to be deferred so that they can take advantage of it.