The Union Cabinet on Wednesday approved the production-linked incentive (PLI) scheme for textiles for a budgetary outlay of Rs 10,683 crore to boost domestic manufacturing of man-made fibres (MMF), garments, and technical textiles.

       Incentives worth Rs 10,683 crore will be provided over five years for manufacturing these products. The scheme is focused at expanding MMFs and technical textiles' value chain and will help India regain its dominant status in the global textile trade, at a time when India's share of global exports has gradually declined over the years.

       It is estimated that the scheme will attract fresh investment of more than Rs 19,000 crore, a cumulative turnover of over Rs 3 trillion, and create additional employment opportunities of more than 750,000 jobs in this sector.

       Technical textile is a new-age material that can be used for production of personal protective equipment kits, airbags, bulletproof vests, and can also be used in sectors such as aviation, defence, and infrastructure. MMFs, such as viscose, polyester, and acrylic, are made from chemicals.

       According to the Federation of Indian Export Organisations (FIEO), MMF apparels currently account for a fifth of India’s overall apparel exports.

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       “So far, we have primarily focused on cotton textiles. Today, two-thirds of the international trade market is of man-made and technical textiles. In such a situation, India should also contribute to the entire ecosystem. The PLI scheme will make domestic companies global champions,” said Textile Minister Piyush Goyal at a briefing.

       Companies near tier 3 or 4 cities will be prioritised, and special attention will be given to how much employment can be generated, added Goyal.

       The scheme will also positively impact states like Gujarat, Uttar Pradesh, Maharashtra, Tamil Nadu, Punjab, Telangana, and Odisha, among others.

       Companies like Reliance, Welspun Global Brands, Arvind, Trident, Shahi Exports, Vardhman Textiles, Paramount Garments, Bombay Dyeing, among others, have evinced an interest in participating in the scheme, said people aware of the matter.

       “With this scheme, India will become a sourcing hub for MMFs, as it has been for cotton garments,” said Vijoy Kumar Singh, additional secretary, Ministry of Textiles.

       Since the textile industry predominantly employs women, the scheme will empower them and increase their participation in the formal economy.

       A Sakthivel, chairman of the Apparel Export Promotion Council, and president of FIEO, said the global MMF market is around $200 billion. India should aim to corner 10 per cent of the market in the next five years.

       “The scheme will help realign our export strategy, which, so far, has been dependent upon cotton products. The scheme will attract investment, both domestic, as well as through foreign direct investment,” added Sakthivel.

       Adarsh Somani, partner, Economic Laws Practice, said a Cabinet nod for the PLI scheme for the textile sector is a timely move against the backdrop of a slowly recovering economy. However, the government should also consider and prepare its defence to ensure the scheme is not adversely called out at the World Trade Organization forum, he added.

       Selection criteria

       There are two types of investment possible with different sets of incentive structures. Any company willing to invest a minimum Rs 300 crore in a plant, machinery, equipment and civil works, excluding land and administrative building cost, to produce MMFs and technical textiles, will be eligible to participate in the first part of the scheme.

       In the second part, any company willing to invest a minimum Rs 100 crore will be eligible to apply for participation in this part of the scheme.

       Singh said there will be no permanent subsidy for the industry and that the larger idea is to support creation of a competitive industry. Only competent companies will be supported through the scheme.

       In case any participant is not able to achieve the required turnover target in any of the years during the scheme's timeline, the company will not get any incentive under the scheme, he added. Only manufacturing companies registered in India will be eligible to participate in the scheme.

       According to the scheme framework and implementation guidelines, the participating company will have to undertake substantial value addition at their own factory premises. Goods manufactured by other units of the same group company will not be accounted for in the calculation of turnover and only one company of a group will be allowed to be registered for PLI for textiles.

       The Empowered Group of Secretaries, chaired by Cabinet Secretary Rajiv Gauba, will monitor the progress of the scheme.