The restriction that applicants must establish a new company for production and investments under the programme may be relaxed in the second edition of the production linked incentive (PLI) scheme for textiles, according to sources.
Even though some applicants claim that establishing a new company would raise their running costs, the Textiles Ministry is unlikely to grant any flexibility under the first edition of the PLI programme, which is currently in place.
“Among the applicants who initially gained clearance for the programme, a few stated that they did not want to establish a new business because they already had operations there. Their arguments were taken into consideration, but the administration is not prepared to alter the current plan in the initial stages,” the source claimed.
With a budget of 10,683 crore, the PLI project for textiles was launched in 2021 with the goal of promoting the production of technical textiles as well as fabrics and garments derived from man-made fibres (MMF). Out of the 67 applications received for it (the inaugural edition of the scheme), 64 applicants were chosen, and 55 selected participants received letters of authorisation till October 2022. According to government estimates, investments worth more than 1,536 crore have already been made.
Minimum investment
The minimum investment requirement (300 crore for part one and 100 crore for part two) and turnover requirement (600 crore for part one and 200 crore for part two) for the PLI scheme’s first iteration were both high, but the Textile Ministry is likely to significantly lower them for the scheme’s second iteration.
With three different thresholds of Rs. 15 crores, Rs. 30 crores, and Rs. 45 crores under consideration and a double turnover requirement, the minimum investment requirement for receiving various levels of incentives is likely to be much lower in the second edition of the PLI scheme,” an industry source said. The second iteration of the PLI plan is probably going to be open to cotton products as well, not simply MMF and technical textiles.
However, it’s also likely that the incentives provided under the second iteration of the PLI plan for textiles will be less than under the first. The high incentive levels under the first edition of the PLI, which range between 11% and 15% in the first year (to be reduced by 1% over the following four years), will also help to prevent applicants who have committed to invest under the plan from pulling out and switching to the second edition, the official continued.
