InvestIndia - PLI Textiles - VF
InvestIndia - PLI Textiles - VF
InvestIndia - PLI Textiles - VF
Introduction
India, the world’s largest democracy as well as one of its biggest economies, has been
on an upward growth trajectory over the recent decades. Our consistent growth rates
have also been among the highest in the world and have attracted some of the most
prominent foreign companies and investors. Growing economic clout has contributed
to a widespread global consensus about a larger role and place for India, both in
economic and geopolitical terms. While India’s service industry has time and again
demonstrated its strength and innovation, the nation’s domestic manufacturing has
been somewhat unable to keep pace.
The rapidly changing dynamics of the 21st century global economy have impacted
several countries including India, due to which, there have been increasing calls for India
to strengthen its domestic manufacturing capacities if it were to acquire a significant
place in the global value chains. To this end, the government of India has been
proactively implementing policies to promote domestic industries, the most concrete
instance of which took the form of the “AatmaNirbhar Bharat Abhiyan” (Self-Reliant
India), launched by Prime Minister Narendra Modi a few months ago. This one-of-its-
kind campaign envisions stronger domestic industrial capacity for India while also
positioning it as a major manufacturing and export hub at the world stage.
Since its launch last year, the “AatmaNirbhar Bharat” scheme has witnessed significant
government push towards enhancing domestic industries through a slew of measures
like incentives, subsidies and funding support. Among the most significant of these
measures was the recent approval by the country’s Cabinet headed by Prime Minister
Modi to extend the Production Linked Incentive (PLI) scheme to 10 crucial sectors of
the economy.
A recent tweet put out by our Prime Minister sums up the PLI story rather well:
1
PRODUCTION LINKED INCENTIVE SCHEMES
2
PRODUCTION LINKED INCENTIVE SCHEMES
The Production Linked Incentive (PLI) scheme contains all the ingredients required to
increase investments, employment generation, domestic value addition, capacity
building and innovation to make India ‘Aatmanirbhar’ or self-reliant.
3
PRODUCTION LINKED INCENTIVE SCHEMES
Under the National Policy on Electronics 2019, which was introduced to position India
as a global hub for electronics system design and manufacturing, the Ministry of
Electronics and Information Technology (MeitY) introduced a Production Linked
Incentive Scheme for large-scale Electronics Manufacturing with effect from April 1,
2020. PLI scheme extends an incentive of 4 per cent to 6 per cent on incremental sales
(over base year) of goods under target segments that are manufactured in India to
eligible companies, for a period of five years subsequent to the base year (FY2019-20).
The scheme was open for filing applications till 31.07.2020. Over the next five years,
the approved companies under the PLI scheme are expected to lead to total production
of more than INR 10,50,000 crore (USD 140.6 Bn). Out of the total production in the next
five years, around 60 per cent will be contributed by exports of the order of INR 6,50,000
crore (USD 87 Bn).
While the PLI schemes have been recently launched by the government in several
crucial sectors of the economy, it is important to note the impact they are creating on
the ground. The most shining example of the PLI scheme’s success in transforming the
domestic manufacturing landscape of a specific sector can be seen in the large-scale
electronics manufacturing domain, where, within some months of the scheme’s launch,
there has been a significant rise in investments leading to higher job creation in the
sector.
The success of the PLI in large-scale manufacturing sets the perfect precedent for the
textiles industry to witness similar growth and leverage the impetus provided by the
PLI scheme and expand its domestic manufacturing capacities.
4
PRODUCTION LINKED INCENTIVE SCHEMES
5
PRODUCTION LINKED INCENTIVE SCHEMES
Domestic Textile and Apparel market including export is around USD 140 billion in 2018-
19. With growth in disposable income and domestic consumption including exports of
textile and apparel is likely to increase at 12% CAGR to reach USD 280 billion by 2025.
The Indian textile industry is one of the largest in the world and has a share of ~5 per
cent of global exports in textiles and apparel. As India continues to be a world leader in
the production of natural fibres, it is steadily gaining ground in the Man-Made Fibres
(MMF), Man-Made Apparels and technical textiles segment. Technical textiles are
textiles materials and products manufactured primarily for technical performance and
functional properties rather than aesthetic characteristics.
On the basis of application, Technical Textiles products are divided into 12 broad
categories.
6
PRODUCTION LINKED INCENTIVE SCHEMES
India shares nearly 6% of world market size of USD 250 Bn registering an annual
average growth of 12%, as compared to 4% world average growth.
India also produces almost all the types of synthetic fibres, be it polyester, viscose,
nylon or acrylic. However, penetration level of technical textiles is low in India at 5-10%,
against 30-70% in advanced countries1. Similarly, India's share in top 40 global MMF
lines is only 0.78 per cent. Further, share in export of 40 HS codes of MMF apparel is
only 6.8 per cent of total apparel export from India.
1
https://pib.gov.in/PressReleasePage.aspx?PRID=1677979#:~:text=India%20shares%20nearly%206%
25%20of,%2D70%25%20in%20advanced%20countries.
2
Source: UN Comtrade
7
PRODUCTION LINKED INCENTIVE SCHEMES
2. MARKET OPPORTUNITY
Technical Textiles
● The Indian technical textiles market was estimated at USD 20 Bn in 2019-20 and
grew at a CAGR of 12% since 2013-14. However, due to COVID-19, the market is
expected to fall 25% in 2020-21 to reach USD 15 Bn3
● India has 4-5% share in the global technical textiles market size across 12
segments of technical textiles4
● In the domestic market, technical textiles constitute 12-15% of total textile value
chain and contributes to about 0.7% to India's GDP4
3
Wazir Advisors Annual Report 2021
4
https://niti.gov.in/technical-textiles-sun-rising-sector-indian-textile-industry
8
PRODUCTION LINKED INCENTIVE SCHEMES
Man-Made Fibres
● Production of man-made staple fibre (MMSF) in India has grown from 1,347 Mn
Kg in 2015-16 to 1,765 Mn Kg at a CAGR of 7%5
● India’s Polyester staple fibre exports have grown at a CAGR of 10% since 2015-16
● Major export markets for man-made filament fibres: USA, Belgium, Nepal,
Bangladesh and Indonesia
● Imports of man-made staple fibre (MMSF) has grown at a CAGR of 9% from USD
351 Mn in 2015-16 to USD 491 Mn in 2019-20
● Within the imported knitted fabrics, the major fabric types include 100% Polyester,
Polyester-Spandex, Nylon and Nylon-Spandex based fabrics primarily used in
sportswear & fashion wear.
5
Ministry of Textiles and Wazir analysis
9
PRODUCTION LINKED INCENTIVE SCHEMES
• MMF will contribute about 84% of total fibre mill consumption between 2015-
2030 (source: PCI Wood Mackenzie).
3. GROWTH DRIVERS
10
PRODUCTION LINKED INCENTIVE SCHEMES
4. KEY TRENDS
11
PRODUCTION LINKED INCENTIVE SCHEMES
12
PRODUCTION LINKED INCENTIVE SCHEMES
● Scheme for Integrated Textile Parks (SITP): To facilitate textile units to meet
international and environmental standards by providing support for common
infrastructure and buildings within parks. SITPs dedicated to technical textiles,
namely, Pallavada Technical Textiles Park (Tamil Nadu), Vraj Integrated Textile
Park Ltd. (Gujarat), Mundra SEZ Integrated Textile and Apparel Park Pvt. Ltd
(Gujarat), Gouthambudha Textile Park Pvt. Ltd (Andhra Pradesh) and Great Indian
Linen & Textile Infra Structure Co. (P) Ltd (Tamil Nadu) are functional in the
13
PRODUCTION LINKED INCENTIVE SCHEMES
country.
● Integrated Skill Development Scheme for the Textiles and Apparel Sector (ISDS):
This scheme aims to provide specific skills as per the requirement of apparel and
other segments of textile industry, as well as employee-trained person in related
occupations.
● Scheme for Capacity Building in Textile Sector (Samarth): The aim is to provide a
demand-driven, placement-oriented skilling program to incentivise the efforts of
the industry in creating jobs with a target to train 10 lakh persons.
8. RECENT INITIATIVES
● Launch of National Technical Textile Mission - With a view to position the country
as a global leader in technical textiles, the Cabinet Committee on Economic Affairs
(CCEA), chaired by the Prime Minister Mr. Narendra Modi, has given its approval to
set up a National Technical Textiles Mission with a total outlay of USD 194 Mn in
February 2020.
● The Mission shall be set up for a 4-year implementation period from FY 2020-21 to
FY 2023-24 and will have the following four components:
14
PRODUCTION LINKED INCENTIVE SCHEMES
Following states have been actively promoting technical textiles through their textile
policies.
6
https://investharyana.in/content/pdfs/Textileper cent20Policyper cent202019.pdf
15
PRODUCTION LINKED INCENTIVE SCHEMES
7
https://ic.gujarat.gov.in/documents/policy/schemes-for-textiles-sectors10012019053545.pdf
8
http://www.spc.tn.gov.in/policy_doc/TN_Textile_Policy_2019.pdf
9
https://www.maharashtra.gov.in/Site/Upload/Governmentper
cent20Resolutions/Marathi/201802171625204302.pdf
16
PRODUCTION LINKED INCENTIVE SCHEMES
10
http://www.karnatakadht.org/english/pdf/order_new_textile_and_garment_policy_2019-24.pdf
https://www.apindustries.gov.in/APIndus/Data/GO/G.O_for_Textiles_and_Apparel_Policy_2018_23.
11
17
PRODUCTION LINKED INCENTIVE SCHEMES
http://www.apindustries.gov.in/APIndus/Data/Industry/Textileper cent20Policy_April_2_2015.pdf
14
18
PRODUCTION LINKED INCENTIVE SCHEMES
The PLI scheme will attract large investment in the sector to further boost domestic
manufacturing, especially in the Man-Made Fibres, Man-Made Apparel and technical
textiles.
Objective:
➢ To enable Textiles Industry to achieve size and scale
➢ To enhance competitiveness
➢ To capture substantial share in the international market.
➢ To support MSMEs manufacturing.
➢ To create 60-70 world class global champion company in these segments.
➢ To attract and invite investment in the sector
➢ Creation of employment opportunities
Project Management Agency (PMA): The scheme shall be implemented with the
help of a PMA.
FY 2022-
23
FY 2023- Optional* Optional*
24
Year 1 FY 2024-25 FY 2025-26 15 11
600 200
19
PRODUCTION LINKED INCENTIVE SCHEMES
Implementation Timeline: The scheme shall be valid upto 2029-30. Incentives under
the scheme will be available for 5 years period i.e. during FY 2025-26 to FY 2029-30
on incremental turnover achieved during FY 2024-25 to FY 2028-29 The gestation
period for both parts of the scheme will be of two (2) years i.e. FY: 2022-23 to FY:
2023-24
Approved financial outlay over a five-year period: INR 10683 crore / ~ USD 1 Bn
Application window for registration under the scheme shall be opened for the
period: January 1- January 31, 2022
- Last date for raising query: 10 days from the date of on-line submission of
application
- Last date for compliance: 10 days from the date of receipt of queries through
email
Expected Outcome: It is estimated that over the period of five years, the PLI Scheme
for Textiles will lead to:
• fresh investment of more than INR 19,000 crore
• cumulative turnover of over INR 3 lakh crore will be achieved under this
scheme
• Create additional employment opportunities of more than 7.5 lakh jobs in this
sector and several lakhs more for supporting activities.
• The textiles industry predominantly employs women, therefore, the scheme
will empower women and increase their participation in formal economy.
20
PRODUCTION LINKED INCENTIVE SCHEMES
21
PRODUCTION LINKED INCENTIVE SCHEMES
22
PRODUCTION LINKED INCENTIVE SCHEMES
23
PRODUCTION LINKED INCENTIVE SCHEMES
24
PRODUCTION LINKED INCENTIVE SCHEMES
25
PRODUCTION LINKED INCENTIVE SCHEMES
26
PRODUCTION LINKED INCENTIVE SCHEMES
551219 Woven fabrics containing >= 85% 55121910 OTHR WOVN FBRCS,
polyester staple fibres by weight, DYED CNTNG POLYETR
dyed, made of yarn of different ... >= 85%
55121920 OTHR WOVN
FBRCS,PRINTD CNTNG
POLYETR> =85%
540710 Woven fabrics of high-tenacity 54071013 UNBLECHD NYLON
yarn, nylon, other polyamides or FURNISHG FBRCS
polyesters, incl. monofilament ...
54071015 UNBLECHD OTHR
NYLON/POLYAMIDE
FBRCS (FILAMENT )
54071016 UNBLECHD POLYESTER
SUITINGS
54071019 UNBLECHD OTHR
POLYESTER FABRICS
54071023 BLECHD NYLON
FURNISHN FBRCS
54071025 BLECHD OTHR
NYLON/POLYAMIDE
FBRCS ( FILAMENT )
54071026 BLECHD POLYESTER
SUITNGS
54071033 DYED NYLON
FURNISHG FBRCS
27
PRODUCTION LINKED INCENTIVE SCHEMES
28
PRODUCTION LINKED INCENTIVE SCHEMES
29
PRODUCTION LINKED INCENTIVE SCHEMES
impregnated, coated,
covered or laminated
weighing between
25G/SQM and 70 G/SQM -
manmade
filament WGHNG>25g
/sqm
Anti-hail/Anti-bird/Anti- 60059000 warp knitted fabrics of wool
fog protection nets or fine animal hair
Fishing nets 56075010 Nylon Fish Net Twine
30
PRODUCTION LINKED INCENTIVE SCHEMES
31
PRODUCTION LINKED INCENTIVE SCHEMES
veins)
32
PRODUCTION LINKED INCENTIVE SCHEMES
33
PRODUCTION LINKED INCENTIVE SCHEMES
34
PRODUCTION LINKED INCENTIVE SCHEMES
35
PRODUCTION LINKED INCENTIVE SCHEMES
36
PRODUCTION LINKED INCENTIVE SCHEMES
37
PRODUCTION LINKED INCENTIVE SCHEMES
38
PRODUCTION LINKED INCENTIVE SCHEMES
39
PRODUCTION LINKED INCENTIVE SCHEMES
40
PRODUCTION LINKED INCENTIVE SCHEMES
Conclusion
This paper described the PLI scheme for the textiles sector which was recently
approved by the Union Cabinet. The assessed benefit of introducing PLI in MMF
segment and Technical Textiles will mean that a number of global and domestic
companies, including numerous MSMEs are likely to benefit from the scheme. It is
expected to be instrumental in achieving growth rates that are much higher than
existing ones for MMF and technical textile industries, develop complete component
eco-systems in India and create global champions manufacturing in India. They will
have to meet the compulsory BIS Quality standards for sales into the domestic market
and also the applicable standards for global markets. The PLI schemes will also lead
to investments in innovation, research and development and upgradation of
technologies developed and deployed by this sector.
This is in addition to PLI schemes for 10 other major sectors of the Indian economy
chosen to spearhead the step towards the vision of “AatmaNirbhar Bharat Abhiyan”.
This scheme has been announced as part of the larger, ongoing campaign by the
Indian government to promote resilience in domestic industries and strengthen their
export capacities to ensure that India becomes an integral pillar in the global value
chains.
The “AatmaNirbhar Bharat Abhiyan” was launched last year by Prime Minister
Narendra Modi in the context of the global coronavirus pandemic that continues to
significantly affect lives and livelihoods. It further led to a growing consensus about
reducing over-dependence on a handful of countries for global supplies and promoting
better capacities in domestic industries so they can cushion against future external
shocks like disasters and pandemics. As a part of the “AatmaNirbhar Bharat Abhiyan,”
the widening of PLI scheme to a vast array of sectors provides immense scope for
Indian manufacturing to bolster and prosper.
41
PRODUCTION LINKED INCENTIVE SCHEMES
As the world continues to grapple with the pandemic while economies reorient
themselves to the new reality, it is clear that the learnings from this pandemic will play
an important role in deciding the future role of many major countries, particularly those
like India, having both vast potential and populations.
Contributors
42
PRODUCTION LINKED INCENTIVE SCHEMES
43