Govt caps turnover growth for textile PLI benefits

The ministry on Tuesday notified final guidelines for the PLI scheme, under which incentives will be extended for five years.

However, in the first seven months of this fiscal, such exports have grown at a phenomenal pace of about 60%, driven by an economic resurgence in advanced markets and a conducive base.

The textile ministry has capped the annual turnover growth at 35% against which incentives under a Rs 10,683-crore production-linked incentive (PLI) scheme will be granted to eligible investors from the second year of operation.However, in the first year, the maximum incentive will be based on a turnover equivalent of 110% of investments made by a company. To get the benefits, eligible companies are mandated to record at least a 25% increase in their annual turnover.

The ministry on Tuesday notified final guidelines for the PLI scheme, under which incentives will be extended for five years. The scheme will remain operational until 2029-30. Interested companies are invited to apply for the scheme between January 1 and January 31, 2022. Manufacturers of select man-made fibre and technical textile products will be granted incentives up to 15%.Potential investors will have to set up new subsidiaries to get the benefits. The scheme is open to two categories of investors.

Those who will invest at least Rs 300 crore will be eligible for a 15% incentive in the first year if they achieve a turnover of `600 crore or more.Similarly, those investing at least Rs 100 crore will get 11% in the first year if their turnover hits `200 crore or more. After the first year, both the categories of investors will have to show a 25% incremental turnover annually. But the benefits will drop by 100 basis points with each passing year in both the cases. Companies will get two years to set up the plants.  But if they can establish the facilities earlier than that, they will get incentives early too.   

 This is part of the 13 PLI schemes, announced by the government in the wake of the Covid-19 pandemic last year, to lure mainly large corporations to expand manufacturing, bolster supply chains and boost exports. The total incentives under the PLI schemes, covering sectors including telecom, electronics, auto part, pharma and chemical cells, were initially estimated at Rs 1.97 lakh crore over a five-year period.

The schemes, put together, are expected to catalyse incremental manufacturing of as much as $520 billion over five years. Textile and garment exports shrank 8.6% on year to $33.7 billion in FY20 and saw a more dramatic, Covid-induced contraction of 10% last fiscal, worse than a 7% drop in overall merchandise exports. However, in the first seven months of this fiscal, such exports have grown at a phenomenal pace of about 60%, driven by an economic resurgence in advanced markets and a conducive base.

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