Textile PLI guidelines - update

The Government of India (‘GOI’) has notified the guidelines with

Brief Overview and Objectives Plant, Machinery, Equipment and Civil Works
• The incentives under the scheme will be (excluding land and administrative building
available for 5 years period i.e., during FY 2025- cost) to produce products of notified lines,
26 to FY 2029-30 on incremental turnover shall be eligible to apply for participation in
achieved during FY 2024-25 to FY 2028-29. this part of the scheme.
• The scheme shall be valid up to 2029-30. • However, the applicant will form a separate
• The scheme has a financial outlay of INR company under Companies Act, 2013, before
10,683 crores. commencement of investment under this
scheme. Such company under the scheme will
Scheme Coverage be eligible to get incentive when they achieve
• The scheme proposes to incentivize MMF a minimum of INR 2600 crore turnover by
Apparel listed at Annexure-I, MMF Fabrics manufacturing and selling the products
listed at Annexure-II and 10 segments of notified under this scheme. Thus, for getting
Technical Textiles products listed at Annexure- incentive, both the conditions of minimum
III to the guidelines, attached herewith. investment and minimum turnover should be
• Turnover of MMF Apparel, MMF Fabrics and met.
products of Technical Textiles will be counted • The participating company is expected
based on product description in GST invoice to achieve this required turnover after a
at 8-digit HS Code. gestation period of 2 years, i.e., in FY 2024-
2025, which will be termed as year 1 and a
Scheme Components and Incentives 15% incentive will be provided on attaining
• The scheme comprises of two parts: required turnover in the notified lines of MMF
and Technical Textiles.
Scheme Part I: • Incentive in the subsequent years will be
• Any person, which includes firm / company provided on achieving a minimum additional
willing to invest a minimum INR 2300 crores in incremental turnover of 25% over the
 company will have to undertake processing and operation
immediate preceding year’s turnover up to year 5.
activities in their own factory premises. Only project
• However, the incentive will be reduced by 1% every year
proposals envisaging processing and operation activities
from year 2 onwards till year 5 i.e., incentive of 11% will be
able to enhance value by not less than 60% in integrated
provided in year 5.
fibre/yarn to fabric, garment & technical textiles will
• Only such sales will be counted, which are transacted
be selected. However, for proposal of independent
through normal banking channel.
fabrics processing house, this required minimum value
enhancement will be only 30%;
Scheme Part-II:
• Turnover achieved from trading and outsourced job work
• Any person, which includes firm / company willing to invest
will not be accounted. The goods which are manufactured
a minimum INR 100 crores in Plant, Machinery, Equipment
by the company registered under the scheme shall only
and Civil Works (excluding land and administrative building
be eligible. In other words, goods manufactured by other
cost) to produce products of notified lines, shall be eligible
manufacturer or unit of same group company shall not be
to apply for participation in this part of the scheme.
accounted for calculation of incremental turnover;
• The applicant will form a company registered under
• Selection of participating company will be done following
Companies Act, 2013, before commencement of investment.
a transparent process based on objective criteria e.g.
Such company under the scheme will be eligible to get
relevant experience, financial & technical capacity, size of
incentive when a minimum of INR 200 crore turnover by
investment proposed, expected job opportunities creation
manufacturing and selling the products notified under this
potential, location of the manufacturing unit, etc. The
scheme has been achieved. Thus, for getting incentives,
selected applicant under the scheme will have to maintain
both the conditions of minimum investment and minimum
separate accounts and balance sheets along with separate
turnover should be met.
inventory of inputs and sales data of production under the
• The participating company is expected to achieve this
Scheme;
required turnover after a gestation period of 2 years, i.e.,
• Only one company of a group will be allowed to be
in FY 2024-2025, which will be termed as year 1 and 11%
registered for PLI for Textiles and none of their other group
incentive on turnover will be provided on attaining required
companies will be eligible for participation in this scheme
turnover in the notified lines of MMF and Technical Textiles.
as a second participant. However, the group may make
• Incentive in the subsequent years will be provided on
more than 1 application for consideration but they will have
achieving a minimum additional incremental turnover of
to take a decision at the time of selection regarding the
25% over the immediate preceding year’s turnover up to
proposal they want to take forward in case more than 1 of
year 5.
their proposals are shortlisted on the basis of transparent
• However, the incentive will be reduced by 1% every year
selection process;
from year 2 onwards till year 5 i.e., incentive of 7% will be
• This Scheme does not preclude beneficiaries for duty
provided in year 5.
remission/duty exemption/duty neutralization provided by
• Only such sales will be counted, which are transacted
Government of India or for making application for State
through normal banking channel.
Government schemes;
• The gestation period for both parts of the scheme will be of
• The total fund outgo and duration of the scheme is fixed.
two years i.e., FY 2022-23 to FY 2023-24.
In case of availability of funds, entry of new players in
the scheme period will be allowed till 23-2022. In such
Common Eligibility Conditions for Both Parts
cases, investment should be completed by FY 24-2023 and
• Notified products removed from the factory under GST
production must start in FY 2025-2024 for receiving incentive
Invoice shall only be taken into account for calculation
for 5 years’ duration. In case the prescribed conditions are
of incremental turnover provided remittances against
not met in time, the incentive will be available for a lesser
such trade are realized/received through normal banking
number of years but rate of incentive will be applicable
channel;
as prescribed to first year of the scheme and so on for
• There will be a provision of cap of 10% over the prescribed
remaining period;
minimum incremental turnover growth of 25% for the
• In case any participant company fails to achieve the
purpose of calculation of incentives from year 2 onwards.
required turnover target in any of the years during scheme
Turnover achieved beyond that cap will not be taken into
period, they will not get any incentive under this scheme for
account for calculation of incentive. However, for year 1 this
that year. However, incentive will be provided on achieving
cap of 10% will be applied over a turnover of two times
the prescribed target in subsequent years but within the
of investment made under the scheme. Turnover achieved
scheme period. Such participants will get assistance for
beyond two times of the investment + 10% shall not be
reduced number of years and at rates as explained in the
accounted for calculation of incentives in year 1;
para above.
• Only manufacturing company registered in India will be
eligible to participate under the scheme. Participating
Framework for Implementation

Scheme Part-1 & Part – 2

Gestation Performance Incentives Please note that detailed operational guidelines for inviting
Year application, selection of eligible participants, effective
Period year claim year
monitoring of the scheme, releasing of incentives, and
* FY 2022-2023
appropriate grievance redressal mechanism etc. will be
* FY 2023-2024 finalized and notified after inter-ministerial consultations.
1 FY 2024-2025 FY 2025-2026
2 FY 2025-2026 FY 2026-2027 A copy of the guidelines on the PLI Scheme for the textiles as
notified in the Official Gazette is attached herewith for your
3 FY 2026-2027 FY 2027-2028
ready reference.
4 FY 2027-2028 FY 2028-2029
5 FY 2028-2029 FY 2029-2030

Please feel free to address any further questions or request for advice to:

Amit Singhania Abhay Sharma Rajat Bose

Gouri Puri Ankita Bhasin

Disclaimer
This is intended for general information purposes only. It is not a substitute for legal advice and is not the final opinion of the Firm. Readers should consult lawyers
at the Firm for any specific legal or factual questions.

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