‘The PLI scheme for textiles sector will create 750k jobs’
NEW DELHI : The government on Wednesday cleared an incentive scheme for attracting private investments into the labour-intensive textiles sector with a focus on man-made fibre apparel, man-made fibre fabrics, and 10 technical textile products. Vijoy Kumar Singh, additional secretary in the ministry of textiles, explained the economics behind the scheme in an interview. Edited excerpts:
Under the production-linked incentive (PLI) scheme, the government will offer ₹10,683 crore in incentives to attract private investment of ₹19,000 crore. Is this an attractive model?
The ₹19,000 crore private investment may yield more than ₹3 trillion turnover. There is a 12% goods and services tax (GST) on sales, which more than recovers the government spending on the scheme. It also will generate 750,000 jobs. That is a win-win situation. The company has to invest, produce, and meet our benchmark and it is our commitment to pay what we have promised.
The scheme offers two slabs of investments, ₹100 crore and ₹300 crore. What is the idea behind this?
Our textile sector is quite fragmented and has diverse segments such as cotton, handloom, processing industry, weaving, knitting, and power loom. We have different expectations from investors. We hope this will attract integrated weaving and processing units. That is a capital-intensive sector. Our weakest link is processing, especially of man-made fibre. The ₹300 crore investment category targets integrated plants. We have a very strong spinning industry in our country. If one decides to set up a weaving, processing, and printing unit to do value addition and sell processed fabric, it will require more investments. For such class of investors, the ₹300 crore category is offered. Garment making, on the other hand, or a small technical textile unit, is a low-capex, labour-intensive business. Making footballs or fire-resistant cloth requires small investments, not ₹300 crore. We need both these sectors.
The scheme does not cover the cotton segment. Is there any plan to include this sector in the scheme?
India is a world-renowned producer of cotton already. Our cotton value chain is very efficient and even cotton processing is quite good in the country. There are some issues in the cotton sector such as lack of extra long staple cotton or contamination of cotton while plucking by hand, which we are addressing separately. However, man-made fibre has been the weak sibling. For the time being, we have decided to focus on that to make it equally vibrant.
How do you plan to market the PLI scheme?
We have had extensive stakeholder consultation with our industry. Unlike other sectors, where there are very limited domestic producers, we already have thousands of producers with high output. We have got in touch with them. They are keenly waiting for the scheme. We do not need a very large number of people in the scheme. The scheme aims at achieving economies of scale so that we can make global champions. In such a large base, there are many people keen to grow. The PLI scheme is open to both domestic and foreign investors on an equal footing. If we get large number of applications, we will have to select from that. Selection will be based on certain criteria, one of which is the backwardness of the area of the proposed investment. The other criteria include the size of the investment and the jobs to be created.
Countries such as Bangladesh and Vietnam are major players in the global textile industry. What are our prospects?
Our textile industry is poised for robust growth. We see that cotton exports are picking up. This year, in the last four-five months, it is much higher than even the level seen in 2019-20. The growth is now visible. This is going to continue. Many good things are going to happen and it is the right time to be in this sector.