Stringent eligibility terms may impede textile projects in PLI scheme

Commerce and industry minister Piyush Goyal chaired a PLI review meeting in New Delhi on Tuesday, where industry representatives voiced concerns about the stringent eligibility conditions that hinder their ability to take advantage of the scheme. They requested to relax minimum investment and incremental turnover criteria, but their requests were not favourably received. The scheme's performance in six sectors has been poor, with no incentives disbursed due to low investment and production rates. The textile industry was among these underperforming sectors. 

An industry veteran told Fibre2Fashion, "The government has made it increasingly difficult for players to avail the benefits. A total of 64 companies succeeded in the scheme across two categories of ₹100 crores and ₹300 crores. Many of these companies might have to reevaluate their projects due to the government's refusal to relax conditions." 

Industry sources report that the government had originally listed the projects under a four-digit Harmonised System Nomenclature (HSN) code, offering greater flexibility in production and a broader market for companies to plan their output. However, the projects were later enlisted under six and eight-digit HSN codes, limiting the range of products a successful project can produce. Fewer products mean a smaller market, which may not support extensive plant and production operations. 

Under these circumstances, companies may struggle to meet the minimum investment threshold for their projects. They may also find it challenging to achieve a 20 per cent incremental turnover condition. According to the conditions, a company can upgrade to a higher investment category but cannot downgrade. This means a company can move from the ₹100 crore category to the ₹300 crore category, but not vice versa, even if market conditions restrict further investment. The current sluggish market conditions are causing significant concern for companies, who are hesitant about the sufficiency of market demand due to slow exports and domestic demand for garments and other textile products. 

R K Vij, president of the Textile Association of India (TAI), told F2F, "The PLI scheme is not bad, but the current market conditions are not conducive for Indian businesses. The government should adopt a more flexible approach to make the scheme more realistic. The present eligibility criteria are very stringent, especially considering the current market scenario." 

Industry sources suggest that incentives have not been disbursed because textile projects are still in the pipeline. The current market conditions present significant obstacles to these projects. Many projects in the textile sector may not be implemented as a result. 

ALCHEMPro News Desk (KUL)