The draft pledged as much as 11% incentive to large companies for investments over Rs 500 crore in greenfield projects in technical textiles.
New textiles minister Piyush Goyal will soon review a proposed Rs 10,683-crore production-linked incentive (PLI) scheme for products made of man-made fibre and technical textiles, amid clamour for reducing the lofty turnover and investment targets for companies to avail of benefits, sources told media.
Goyal, who is also the commerce and industry minister, 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.
But the 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. The idea is to reclaim India’s export markets after ceding substantial ground to Bangladesh and Vietnam in recent years. Goyal took over as the textiles minister on July 8, taking over from Smriti Irani.
In its draft PLI scheme floated earlier, the textile ministry proposed incentives in the range of 7-11% 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. “It’s a very important scheme, as it has potential to create a huge number of jobs. So, obviously, the minister’s guidance will be sought and he will review it,” said an official source.
The draft pledged as much as 11% 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% 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% for brownfield projects. This will be subject to an increase in turnover by 50% each year.