Production Linked Incentive (PLI) Scheme: "EMPOWER IAS"

In news:

• The Union Government has approved Production Linked Incentive (PLI) Scheme for Textiles.  This move is a part of the overall announcement of PLI Schemes for 13 sectors made earlier during the Union Budget 2021-22.

 

PLI Scheme:

• • In order to boost domestic manufacturing and cut down on import bills, the union government in March 2020 introduced a PLI scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units.
  • Apart from inviting foreign companies to set shop in India, the scheme also aims to encourage local companies to set up or expand existing manufacturing units.
  • The Scheme has also been approved for sectors such as automobiles, pharmaceuticals, IT hardware including laptops, mobile phones & telecom equipment, white goods, chemical cells, food processing, etc.
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Features of PLI for Textile Sector:

• Aims to promote the production of high value Man-Made Fibre (MMF) fabrics, garments and technical textiles.
• Incentives worth Rs 10,683 crore will be provided on production to the sector over a span for 5 years.
• Incentives to eligible producers in two phases:
  • First: Any person 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 products of MMF fabrics, garments and products of technical textiles will be eligible to participate.
  • Second: Investors willing to spend a minimum of Rs 100 crore under the same conditions (as in the case of the first phase) shall be eligible to apply.

 

 

Expected Benefits:

• Increase in Investment and Employment:
  • It will lead to fresh investment of more than Rs.19,000 crore, cumulative turnover of over Rs. 3 lakh crore and additional employment opportunities of more than 7.5 lakh jobs in this sector and several lakhs more for supporting activities.
    • The textiles industry predominantly employs women, therefore, the scheme will empower women and increase their participation in the formal economy.
• Priority to Backward Areas:
  • In addition, priority will be given for investment in Aspirational Districts, Tier 3, Tier 4 towns, and rural areas and due to this priority, Industry will be incentivized to move to backward areas.
     
  • This scheme will positively impact especially States like Gujarat, UP, Maharashtra, Tamil Nadu, Punjab, AP, Telangana, Odisha etc.
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What are the incentives involved?

• An incentive of 4-6 per cent was offered last year on mobile and electronic components manufacturers such as resistors, transistors, diodes, etc.
• Similarly, 10 percent incentives were offered for six years (FY22-27) of the scheme for the food processing industry.
• For white goods too, the incentive of 4-6 per cent on incremental sales of goods manufactured in India for a period of five years was offered to companies engaged in the manufacturing of air conditioners and LED lights.

 

 

What is in the box for Textiles?

• The PLI scheme for textiles aims to promote the production of high value Man-Made Fibre (MMF) fabrics, garments and technical textiles.
• Any person 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 products of MMF fabrics, garments and products of technical textiles will be eligible.
• Investors willing to spend a minimum of Rs 100 crore under the same conditions shall be eligible.

 

Benefits offered

• PLI scheme for Textiles will promote production of high value MMF Fabric, Garments and Technical Textiles in country.
• The incentive structure has been so formulated that the industry will be encouraged to invest in fresh capacities in these segments.
• This will give a major push to the growing high-value MMF segment which will complement the efforts of the cotton and other natural fiber-based textiles industry.
• This will help to generate new opportunities for employment and trade, resultantly helping India regain its historical dominant status in global textiles trade.

 

 

India’s textile sector

• The textile industry in India traditionally, after agriculture, is the only industry that has generated huge employment for both skilled and unskilled labour.
• The domestic textiles and apparel industry contributes 5% to India’s GDP, 7% of industry output in value terms, and 12% of the country’s export earnings.
• The textile industry continues to be the second-largest employment generating sector in India. It offers direct employment to over 35 million in the country.
• India is first in global jute production and shares 63% of the global textile and garment market. India is second in global textile manufacturing and also second in silk and cotton production.
• 100% FDI is allowed via automatic route in textile sector.