Ease of Doing Business for MSMEs: Weeks after notifying the extension of Rebate of State and Central Taxes and Levies (RoSCTL) scheme and rates and guidelines for Remission of Duties and Taxes on Exported Products (RoDTEP) scheme to boost textile exports, the government on Wednesday approved the Production Linked Incentive (PLI) scheme for the textile sector. According to a statement from the Ministry of Textiles, the scheme was approved for man-made fibre (MMF) apparel, MMF fabrics, and 10 segments of technical textiles with a budgetary outlay of Rs 10,683 crore. “The incentive structure has been so formulated that industry will be encouraged to invest in fresh capacities in these segments. This will give a major push to growing high-value MMF segment which will complement the efforts of cotton and other natural fibre-based textiles industry in generating new opportunities for employment and trade,” the government said.
Micro, small, and medium enterprises (MSMEs), which make up for the majority share of businesses involved in the textile sector, and experts have hailed the government’s decision that is likely to boost manufacturing for units along with employment generation. “This will bring a lot of investment in the sector. The availability of fabric will also be further easy. This will definitely boost employment among MSMEs as well as help them expand their business and produce more. “India produces 80 per cent cotton and 20 per cent MMF but that’s opposite to what the world does. There’s enough MMF fibre supply in India but not MMF fabric. The PLI scheme boost manufacturing of MMF fabric,” A Sakthivel, Chairman, Apparel Export Promotion Council (AEPC) told Financial Express Online.
The scheme will lead to more than Rs 19,000 crore of investment in the textile sector in the five-year period with a cumulative turnover of over Rs 3 lakh crore, the government noted. This “will 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.”
“The scheme will enable small businesses, MSMEs, and startups in the textile sector to explore opportunities at a global scale and generate extensive employment. This is much needed at this stage where these enterprises are looking for opportunities to reclaim their lost positions and achieve sustainable growth. Repeated lockdowns and Covid-induced restrictions have created several hurdles for these entities and the PLI scheme for textiles is a welcome measure which will have a lasting impact,” Arvind Sharma, Partner, Shardul Amarchand Mangaldas & Co. told Financial Express Online.
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Ashok Veda, who is currently the managing director at Veda Texspares — manufacturer and supplier of textile testers, testing equipment, textile machinery, and parts, etc. — said this will help boost their employment. “This would also help in getting more orders while exports will also grow along with local employment. The quality of production at our plants will also improve with better investment,” Veda told Financial Express Online.
According to the government, there are two types of investment possible with a different set of incentive structure. Those willing to invest at least Rs 300 crore in plant, machinery, equipment, and civil works (excluding land and administrative building cost) to produce products of notified lines (MMF fabrics, garments) and products of technical textiles will be eligible to apply for participation in the first part of the scheme. In the second part, enterprises willing to invest minimum of Rs 100 crore will be eligible to apply for participation in this part of the scheme. Also, priority will be given for investment in aspirational districts, Tier-III and IV towns, and rural areas.
“While the blueprint of the policy seems promising, detailed guidelines would need to be evaluated for further evaluating the real benefits for the sector and allocations for MSME. Further, the scheme by design does not benefit all players in the industry since there is a selection criterion. This would be true for MSME too and hence, some businesses may get the opportunity to transform while others will only be benefitted indirectly if at all large entities in their network are shortlisted for the scheme,” Adarsh Somani, Partner, Economic Laws Practice told Financial Express Online.