Textile ministry plans ₹10k-crore scheme to promote production in key sectors
The Textile Ministry is mulling a scheme estimated to cost over ₹10,000 crore to promote the domestic production of a number of products such as sanitary pads, tampons, sweaters and jerseys.
The Ministry has identified 50 key sectors, within which it aims to introduce the production linked scheme (PLI) that help boost India’s growth in sector to make it a global textile player, officials familiar with the development told Hindustan Times. While the budget for the scheme has been approved, its contours will be shaped after another meeting with the finance department later this week. The final scheme will then be presented to the cabinet.
PLI across ten different sectors, including electronics and telecommunications, was first mentioned by Prime Minister Narendra Modi in November this year. Similar schemes are also likely to be introduced by the ministries to encourage domestic production as the focus on the government’s flagship scheme Atmanirbhar Bharat (self-dependent India) continues.
A ministry official confirmed that scheme was in the process if being finalised and was waiting for the expenditure finance committee’s approval.
The domestic textile export market in India is estimated at $140 billion in 2018-19, and is a 45 million people industry. The ministry anticipates that it can grow to nearly $280 billion by 2015.
The Textile scheme will offer three categories on which incentives will be provided, for already active players brackets of ₹100-400 crore and over ₹400 crore of net turn over exists. It will have a five-year gestation period. “In this case, the idea is that if the company in the first category receives a 50% incremental turn over, they will be provided with 9% seed funding from the government,” said an official on the condition of anonymity. “For the second category, 7% on net incremental turn over will be disbursed.” The base year to determine the net incremental turn over will be 2019-20 and the scheme is likely to come into effect from 2022.
For new companies venturing into textile, a category called Greenfield will apply. These companies will have to make at least a ₹500 crore investment, on which the gains would be 11% to start with.
The move will also create a paradigm shift in the Indian textile production market, which officials said is largely cotton driven. India’s mill fibre consumption of cotton is nearly 60%, while MMF is barely 34%. Globally, however, the trend is reversed with cotton being barely 30% of consumption and MMF accounting for 70%.
“What we are trying to achieve is shift towards man-made fibre, a sector in which India lags behind globally,” said a second official. At present, India’s share in the MMF market is near 20%, compared to China and Vietnam, which are poised at over 40%.
The scheme will focus on end-to-end results, from processing raw material to export of finished products. This, say officials, will form the base of the structural changes in the Textile sector for India.
In terms of export of jackets for men and boys made from synthetic fibres, that is one of the key sectors identified, India constitutes barely 0.9% of the global market. It lags behind Bangladesh, 3.1%, and Vietnam, 9.4%. In terms of women’s or girls briefs and panties, India’s share is a mere 0.4%.
When it comes to export of technical textiles such as tampons and sanitary napkins, the country fares even worse with a share of 0.23% of the $15.75 billion market. Other such items that make up a key focus area are sports and outdoors garments (swimming), 1.63% and sterile surgical catgut, suture materials, 0.57%.
Indian Technical Textile Association chairperson Dr. Sundararaman said that the first impression is that any scheme has to be seen light of overall activities. “Very happy to see the proactiveness of the ministry towards the industry,” Sundararaman. “With PLI, we are seeing a kind of turn-over link scheme. Until this point, such schemes have been limited to small or medium enterprises. In that way, this scheme is unique.
Sundararaman added that the thought process of the government was definitely valid, but one will have to wait and see on the results. “A lot of us industry players have been talking about creating large companies which can grow. This scheme can incentivise that.”