The Indian government has issued a textile PLI! Introduces ‘Smart Textiles' as an incentive for 30-60% value addition

28th September 2021, Mumbai:

The government has announced the Rs. 10,683 crore Production Linked Incentive (PLI) plan for textiles, which includes 10 technological textiles, 14 manmade fiber (MMF) items, and 40 MMF apparel.

The program divides items such as jackets, jerseys, trousers, overcoats, polyester fabric, and nylon furnishing textiles into two groups, each with various incentives depending on a minimum investment of Rs. 300 crore and Rs. 100 crore.

Only those firms that offer 60% value addition in integrated fiber/yarn to fabric, garment, and technical textiles, and 30% in the case of independent fabrics processing houses, will be selected for the incentive under the program, according to the Ministry of Textiles (MoT).

Safety airbags, shade netting, bulletproof jackets, surgical sutures, PPE for medical usage, and carbon fiber are examples of technical textiles.

The government has also included ‘Smart Textiles' to the list of items qualifying for the advantages, a new generation niche product that is a combination of various wearable materials integrated with electronics, implanted with active devices for medical, defense, and special purpose.

According to MoT, the description does not currently fit into any HSN Code. For this product, a valid 8-digit HSN Code must be established from scratch.

According to the announcement, the scheme's incentives would be accessible for five years, from FY26 to FY30, on incremental turnover produced between FY25 and FY29, with a budgetary investment of Rs. 10,683 crore.

However, if a firm meets its investment and performance objectives a year ahead of schedule, it will be eligible one year ahead of schedule from FY25 to FY29.

Anyone who is willing to invest a minimum of Rs. 300 crore in the plant, machinery, equipment, and civil works (excluding land and administrative building costs) to produce products from the notified lines is eligible to participate, but they must first form a separate company under the Companies Act, 2013, before investing under this scheme.

Both the requirements of minimum investment and a minimum turnover must be satisfied in order to get an incentive. After a two-year gestation period, firms investing Rs. 300 crore are anticipated to generate the requisite turnover of Rs. 600 crore, for which they would receive a 15% incentive.

In the following years, the incentive will be based on attaining a minimum extra incremental turnover of 25% above the previous year's turnover up to the year.

However, starting in the second year and continuing until the fifth year, the incentive will be decreased by 1% each year until it reaches a maximum of 11% in the fifth year.

According to the announcement, only sales made through traditional banking channels will be counted.

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