According to sources, 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 calls to lower the lofty turnover and investment targets for companies to qualify for benefits.
Goyal, who is also the commerce and industry minister, confronts a difficult challenge because the labor-intensive garment industry wants the programme to include value-added cotton goods. The goal is to regain India’s export markets after losing significant territory in recent years to Bangladesh and Vietnam. On July 8, Goyal took over as textiles minister, succeeding Smriti Irani.
The proposal proposed an 11 percent incentive for major firms investing more than Rs 500 crore in greenfield projects in technical textiles. The incentive was connected to an incremental turnover of Rs 1,500 crore in the first year, followed by a 25% increase in turnover each year following that. Some players, who are having to cope with a Covid-induced liquidity constraint, want the scheme’s deployment to be delayed so they can benefit from it.
Exports of textiles and clothing fell 8.6 percent year on year to $33.7 billion in FY20. In recent years, India has been outperformed by both Bangladesh and Vietnam in terms of clothing exports. Last fiscal year, such exports fell 10% to $30.3 billion, outperforming a 7% decline in overall merchandise exports. According to recognised textiles expert DK Nair, meeting the objectives, particularly for incremental turnover, will be difficult.