The Centre is considering expanding the scope of its ₹11,000-crore production linked incentive (PLI) scheme for the textile sector to include more product lines such as t-shirts and innerwear, according to two individuals familiar with the development. This strategic move is aimed at enhancing the scheme's effectiveness in bolstering India's textile exports, which have seen a significant decline in recent years.

Current Scenario and Rationale

Approved in September 2021, the PLI scheme was designed to promote the production and export of man-made fibers and technical textiles. Despite these efforts, India's textile exports have not experienced the expected growth. Instead, there has been a notable drop, with exports falling by 11.69% from $16.24 billion in 2018 to $14.34 billion in 2023. This downturn has prompted the government to reevaluate and modify the scheme to better support the sector.

Proposed Changes

The government is planning several key modifications to the existing PLI scheme:

1. Inclusion of Additional Product Lines: To broaden the scheme’s impact, the Centre intends to bring more product lines under its ambit, specifically t-shirts and innerwear. These categories represent significant market segments with substantial export potential, and their inclusion is expected to diversify and strengthen the export portfolio of Indian textiles.

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3. Extended Implementation Timeline: The current PLI scheme stipulates a two-year period for applicants to set up production facilities. Recognizing the challenges faced by companies in meeting this deadline, the government is considering extending this period to over three years. This extension will provide companies with more flexibility and time to establish their operations, ensuring better compliance and effectiveness.

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Expected Impact

The proposed changes aim to reinvigorate the textile sector by:

• Enhancing Competitiveness: By including high-demand products like t-shirts and innerwear, the scheme will tap into new markets and increase the competitiveness of Indian textiles on the global stage.
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• Facilitating Growth: Extending the timeline for setting up production facilities will alleviate pressure on companies, allowing for more strategic planning and execution. This is expected to lead to higher participation in the scheme and, consequently, greater output and export volumes.
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• Driving Innovation: The broader product coverage and extended implementation period will encourage companies to innovate and invest in newer, more efficient production technologies, contributing to the overall modernization of the sector.
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Stakeholder Feedback

Industry stakeholders have generally welcomed the proposed changes. They believe that the inclusion of additional product lines will open new avenues for growth, while the extended timeline will provide much-needed breathing space to align their operations with the scheme's requirements.

Government’s Commitment

These proposed modifications underscore the government’s commitment to supporting the textile sector and ensuring the PLI scheme achieves its intended objectives. By addressing the scheme’s limitations and incorporating industry feedback, the government aims to create a more conducive environment for the sector’s growth and development.

Conclusion

The Centre’s proactive approach in tweaking the PLI scheme to include more product lines and extend the setup timeline reflects a strategic effort to bolster the textile industry. These changes are expected to enhance the scheme’s effectiveness, drive export growth, and solidify India’s position in the global textile market. As the government continues to refine its policies, the textile sector can look forward to a more robust and supportive framework that fosters sustainable growth and competitiveness.