The government on Thursday selected 61 companies, including Goa Glass Fibre, Trident, MCPI, Shahi Exports, Arvind Mills, Gokaldas Exports and Monte Carlo, to receive benefits under its Production Linked Incentives (PLI) scheme. of Rs 10,683 crore for the labour-intensive textile and apparel sector.
Applications from six other companies, presumably including big names, are still being considered.
Textiles Secretary UP Singh said companies have pledged to invest Rs 19,077 crore over five years under the scheme which will result in an additional Rs 1.85 trillion in revenue and the creation of direct jobs for 2,40,000 people.
Incentives of Rs 6,013 crore will be extended to these 61 players, who represent 56% of the Rs 10,683 crore the government has earmarked for the scheme.
Commenting on the six applicants whose fate has yet to be decided, Singh said that in some cases more than one company from a particular group applied for incentives under the scheme; in the rest of the cases, some minor corrections in the applications are necessary. The names of these companies have not yet been disclosed. Sources previously suggested that Reliance and Welspun were also among the candidates.
The PLI textile program covers 50 synthetic fiber (MMF) garments, 42 MMF fabric products and 10 technical textile items. The incentives will be extended for five years. It will remain operational until 2029-30.
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 Rs 600 crore or more.
Similarly, those who invest at least Rs 100 crore will get 11% in the first year if their turnover reaches Rs 200 crore or more. After the first year, both categories of investors must show an additional turnover of 25% per year for the next four years. But earnings will fall 100 basis points year over year either way.
The Ministry of Textiles selected 13 companies in the first category, including Himatsingka Seide, Madura Industrial Textiles, Paragon Apparel, Shree Durga Syntex and Kimberly Clark India. No less than 48 companies were selected in the second category. They include Pearl Global, AYM Syntex, Kennigton Industries, MI Industries, Donear Industries, Nobel Hygiene, Ginni Filaments and Texport Industries.
Interestingly, among the eligible investors, seven are foreign companies, which have pledged to invest 3,559 crores under the program by setting up units in India. These are Autoliv India, Avgol India, Evertop Textile & Apparel Complex; Kimberly Clark India; Rane TRW steering systems; Teejay India; Tora International.
This PLI regime marked a paradigm shift in government decision-making on two counts. First, it allocates a lot of money to big business, abandoning its time-consuming and costly bias in favor of small business. Second, it seeks to correct India’s historical policy preference for a cotton-dominated value chain, which is contrary to the global trend. The idea is to win back India’s export markets after losing ground to Bangladesh and Vietnam in recent years.
Even before the pandemic hit, India accounted for 4.3% (or $35.5 billion) of global textile and apparel exports in 2019, but its share in the synthetic fibers segment was well below 2. .8% ($9.3 billion). In fact, synthetic fiber products accounted for only 26% of India’s textile and garment exports, compared to nearly 50% in China and 49% in Vietnam.