<h1 class="ql-align-center">Production Linked Incentive (PLI) scheme for the Textile Sector</h1> <h2>Context:</h2> <ul><li>Recently, the Union Cabinet has approved the Production Linked Incentive (PLI) scheme for the textile sector.</li></ul> <h2>About:</h2> <ul><li>In order to&nbsp;boost domestic manufacturing&nbsp;and&nbsp;cut down on import bills,&nbsp;the union government in March 2020 introduced a&nbsp;Production Linked Incentive (PLI) &nbsp;scheme that&nbsp;aims to give companies incentives&nbsp;on incremental sales from products manufactured in domestic units.</li></ul> <ul><li>The scheme for respective sectors has to be implemented by the concerned ministries and departments.</li></ul> <ul><li>Apart from inviting foreign companies&nbsp;to set shop in India, the scheme also aims to&nbsp;encourage local companies&nbsp;to set up or&nbsp;expand existing manufacturing units.</li></ul>﻿<ul><li>The Scheme has&nbsp;also been approved for sectors&nbsp;such as automobiles, pharmaceuticals, IT hardware, white goods, chemical cells, food processing, etc.</li></ul> <h2>Eligibility Criteria:</h2> <ul><li>The minimum investment threshold for MSME is Rs 10 crore and Rs 100 crores for others.</li></ul> <ul><li>Under food processing, SMEs and others must hold over 50 percent of the stock of their subsidiaries, if any.</li></ul> <ul><li>On the other hand, for businesses under pharmaceuticals, the project has to be a greenfield project while the net worth of the company should not be less than 30 percent of the total committed investment.</li></ul> <h2>Benefits:</h2> <ul><li>This will give a major push to the growing high-value Man-Made Fibre (MMF) segment which will complement the efforts of the cotton and other natural fiber-based textiles industry.</li></ul> <ul><li>The incentive structure has been so formulated that the industry will be encouraged to invest in fresh capacities in these segments.</li></ul> <ul><li>This will help to generate new opportunities for employment and trade, resultantly helping India regain its historical dominant status in the global textiles trade</li></ul> <h2>Indian Textile Industry:</h2> <ul><li>Textiles &amp; garments industry&nbsp;is a&nbsp;labour-intensive sector&nbsp;that employs&nbsp;45 mn people&nbsp;in India and is&nbsp;second only to the agriculture sector&nbsp;in terms of employment.</li></ul> <ul><li>It is&nbsp;one of the oldest industries in the Indian economy&nbsp;and is a storehouse and carrier of traditional skills, heritage, and culture.</li></ul> <ul><li>It can be divided into&nbsp;two segments:</li></ul> <ul><li class="ql-indent-1">The&nbsp;unorganised sector&nbsp;is small-scale and uses traditional tools and methods.</li></ul> <ul><li class="ql-indent-1">The&nbsp;organised sector&nbsp;uses modern machinery and techniques and consists of the spinning, apparel, and garments segment.</li></ul> <h2>Significance of Indian Textile Industry:</h2> <ul><li>It contributes&nbsp;2.3%&nbsp;to Indian GDP and employs more than&nbsp;21% of total employment.</li></ul> <ul><li>India is the largest producer of cotton and jute in the world</li></ul> <ul><li>India is also the&nbsp;second-largest producer of silk&nbsp;in the world and 95% of the world’s hand-woven fabric comes from India.</li></ul> <ul><li>India is the&nbsp;6th&nbsp;largest producer&nbsp;of Technical textiles&nbsp;with&nbsp;a 6% Global Share.</li></ul> <h2>Challenges in the Textile Sector:</h2> <ul><li>The Indian textile industry is highly fragmented and is being dominated by the unorganized sector and small and medium industries.</li></ul> <ul><li>The Indian textile industry has its limitations of access to the latest technology (especially in small-scale industries) and failures to meet global standards in the highly competitive market</li></ul> <ul><li>The tax structure makes the garments expensive and uncompetitive in domestic as well as international markets. Another threat is rising labour wages and workers’ salaries.</li></ul> <ul><li>The apparel units in India have an average size of 100 machines which is very little in comparison with Bangladesh, which has on an average of at least 500 machines per factory.</li></ul> <ul><li>Due to the challenges given above the foreign investors are not very enthusiastic about investing in the textile sector which is also one of the areas of concern.</li></ul>