Business & Policy | News & Insights

Government to replace ATUF plan with PLI-like scheme: to provide funding up to 50 crore

Published: December 14, 2022

To encourage home improvement and the production of textile equipment, the government is likely to replace Amended Technology Upgradation Fund Scheme (ATUFS), its flagship incentive programme for capital investments in textiles and clothing, with a programme similar to the production-linked incentive (PLI).

The funding in plant and equipment of one crore to fifty crores for MSMEs and more than fifty crores for non-MSMEs could be the cutoff for textile manufacturing models to be eligible for subsidies under the proposed scheme. Once the threshold investment in modernizing through the installation of benchmarked technology has been made, incentives may be given depending on the revenue gained.

Weaving, knitting, and spinning are only a few of the textile divisions that may receive incentives of up to 60% depending on funding and turnover norms.

According to officials, the textile value chain’s weak links are being identified, and a statement will likely be made in the next Budget 2023–24. An official said, “The ATUFS is being examined and a new plan may be unveiled soon.”

ATUFS was announced in January 2016 with a budget of 17,822 crore with the goal of attracting about 95,000 crores in new investments. Up until 2022, it has contributed to the creation of nearly 3.5 million jobs. The plan expired on March 31, 2022.

After conducting a “expertise hole evaluation,” the government identified 60 crucial components that are used in the textile industry but aren’t produced locally and that India wants to produce.

Only the goods produced by the registered company might be eligible for the proposed scheme’s incentives, and turnover from employment activities in specific segments could be considered.

The PLI programme for clothing made of synthetic fibres (MMF), MMF materials, and products made of technical textiles was approved by the government last year for a total of 10,683 crores.

The second iteration of the PLI for textiles is now in development, and it is likely to include incentives for the production of clothing, home textiles like blankets and bed spreads, and textile accessories like lace, buttons, and zippers.

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