Contents

  1. Catching up: Scheme for textile sector

Catching up: Scheme for textile sector

Context:

The Union Cabinet has cleared an outlay over Rs. 10 thousand crore on a production linked incentive scheme in the man-made fibre (MMF) apparel, fabrics, and technical textiles sectors.

Relevance:

GS-III: Industry and Infrastructure, GS-III: Indian Economy (Employment, Growth & Development of Indian Economy, Inclusive Growth)

Dimensions of the Article:

  1. Significance of Textile Sector in India
  2. About the PLIS Scheme for textiles sectors
  3. Expected Benefits

Significance of Textile Sector in India

  • The Textile Sector accounts for 7% of India’s manufacturing output, 2% of GDP, 12% of exports and employs directly and indirectly about 10 crore people.
  • Owing to the abundant supply of raw material and labour, India is the largest producer of cotton (accounting for 25% of the global output) and second-largest producer of textiles and garments and man-made fibres (polyester and viscose).
  • The availability of a strong domestic market in India is a major reason that increases the importance of the sector.

About the PLIS Scheme for textiles sectors

  • The Union Cabinet has cleared an outlay of Rs. 10,683 crore on a production linked incentive scheme in the man-made fibre apparel, fabrics, and technical textiles sectors, and it could help draw new investment of more than Rs. 19,000 crore.
  • In order to boost domestic manufacturing and cut down on import bills, the union government in March 2020 introduced a PLI scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units.
  • Apart from inviting foreign companies to set shop in India, the scheme also aims to encourage local companies to set up or expand existing manufacturing units.
  • The Scheme has also been approved for sectors such as automobiles, pharmaceuticals, IT hardware including laptops, mobile phones & telecom equipment, white goods, chemical cells, food processing, etc.
  • Aims to promote the production of high value Man-Made Fibre (MMF) fabrics, garments and technical textiles.
  • Incentives worth Rs 10,683 crore will be provided on production to the sector over a span for 5 years.
  • Incentives to eligible producers in two phases:
    • First: Any person or company willing to invest a minimum of Rs 300 crore in plant, machinery, equipment and civil works (excluding land and administrative building cost) to produce products of MMF fabrics, garments and products of technical textiles will be eligible to participate.
    • Second: Investors willing to spend a minimum of Rs 100 crore under the same conditions (as in the case of the first phase) shall be eligible to apply.

Expected Benefits

  • The scheme could aid in the creation of 7.5 lakh direct jobs. The textile sector is an employment intensive sector and the investment in the textile sector would have a multiplier effect on the Indian economy especially in job creation.
  • Two-thirds of India’s textile exports now are cotton-based whereas 66-70% of world trade in textiles and apparel is MMF-based and technical textiles. The PLI incentives aim to boost investment in new capacities in man-made fibre (MMF) apparel, MMF fabrics, and 10 segments or products of technical textiles.
  • India’s focus on the manufacture of textiles in the MMF sector is expected to help boost its ability to compete globally in the textiles market.
  • Given that priority would be given for investment in aspirational districts, tier-three, tier-four towns and rural areas, the new scheme would promote balanced regional development.
  • The textiles industry predominantly employs women, therefore, the scheme will empower women and increase their participation in the formal economy.
  • In addition, priority will be given for investment in Aspirational Districts, Tier 3, Tier 4 towns, and rural areas and due to this priority, Industry will be incentivized to move to backward areas. This scheme will positively impact especially States like Gujarat, UP, Maharashtra, Tamil Nadu, Punjab, AP, Telangana, Odisha etc.

-Source: The Hindu

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