Production Linked Incentive (PIL) Scheme for Textiles

Production Linked Incentive (PIL) Scheme for Textiles

MINISTRY OF TEXTILES 

NOTIFICATION

New Delhi, the 24th September, 2021

SUBJECT: PRODUCTION LINKED INCENTIVE (PLI) SCHEME FOR TEXTILES 

F. No. 12015/03/2020-IT.— 1.  INTRODUCTION

The Government has approved the Production Linked Incentive (PLI) Scheme for promotion of MMF Apparel, MMF Fabrics and Products of Technical Textiles. The scheme will be implemented from the date of this notification. Incentives under the scheme will be available for 5 years period i.e. during FY 2025-26 to FY 2029-30 on incremental turnover achieved during FY 2024-25 to FY 2028-29 with a budgetary outlay of Rs. 10,683crore. However, if a company is able to achieve the investment and performance targets one year early then, they will become eligible one-year in advance starting from 2024-25 to 2028-29 i.e. for 5 years.

2. OBJECTIVE

The Production Linked Incentive (PLI) Scheme is intended to promote production of MMF Apparel & Fabrics and, Technical Textiles products in the country to enable Textiles Industry to achieve size and scale; to become competitive and a creator of employment opportunities for people.

3. PRODUCTS DETAILS

The scheme proposes to incentivise MMF Apparel listed at Annexure-I, MMF Fabrics listed at Annexure-II and 10 segments of Technical Textiles products listed at Annexure-III. Turnover of MMF Apparel, Fabrics and products of Technical Textiles will be counted based on product description in GST invoice at 8-digit HS Code.

4. SCHEME  SEGMENTS AND INCENTIVES

4.1 Scheme Part- 1: Any person, which includes firm / company willing to invest a minimum ₹300 Crore in Plant, Machinery, Equipment and Civil Works (excluding land and administrative building cost) to produce products of Notified lines, shall be eligible to apply for participation in this part of the scheme. However, applicant will form a separate company under Companies Act, 2013, before commencement of investment under this scheme. Such company under the scheme will be eligible to get incentive when they achieve a minimum of ₹600 Crore turnover by manufacturing and selling the products Notified under this scheme. Thus, for getting incentive, both the conditions of minimum investment and minimum turnover should be met. The participating company is expected to achieve this required turnover after a gestation period of two years, i.e. in FY 2024-2025, that will be termed as year 1 and a 15% incentive will be provided on attaining required turnover in the Notified lines of MMF and Technical Textiles. Incentive in the subsequent years will be provided on achieving a minimum additional incremental turnover of 25% over the immediate preceding year’s turnover up to year 5. However, the incentive will be reduced by 1% every year from year 2 onward till the year 5 i.e. 11% in the year 5. Only such sales will be counted, which are transacted through normal banking channel.

4.2 Scheme Part-2: Any person, which includes firm / company willing to invest a minimum ₹100 Crore in Plant, Machinery, Equipment and Civil Works (excluding land and administrative building cost) to produce products of Notified lines, shall be eligible to apply for participation in this part of the scheme. However, the applicant will form a company registered under Companies Act, 2013, before commencement of investment. Such company under the scheme will be eligible to get incentive when they achieve a minimum of ₹ 200 Crore turnover by manufacturing and selling the products notified under this scheme. Thus, for getting incentives, both the conditions of minimum investment and minimum turnover should be met. The participating company is expected to achieve this required turnover after a gestation period of two years, i.e. in FY 2024-2025, that will be termed as year 1 and 11% incentive on turnover will be provided on attaining required turnover in the Notified lines of MMF and Technical Textiles. Incentive in the subsequent years will be provided on achieving a minimum additional incremental turnover of 25% over the immediate preceding year’s turnover up to year 5. However, the incentive will be reduced by 1% every year from year 2 onward till the year 5 i.e. 7% in the year 5. Only such sales will be counted, which are transacted through normal banking channel.

5. Common Conditions for both parts of Scheme:

(a) Notified products removed from the factory under GST Invoice shall only be taken into account for calculation of incremental turnover provided remittances against such trade are realised/received through normal banking channel;

(b) There will be a provision of cap of 10% over the prescribed minimum incremental turnover growth of 25% for the purpose of calculation of incentives from Year 2 onward. Turnover achieved beyond that cap will not be taken into account for calculation of incentive. However, for Year 1 this cap of 10% will be applied over a turnover of two times of investment made under the scheme. Turnover achieved beyond two times of the investment + 10% shall not be accounted for calculation of incentives in Year 1;

(c) Only manufacturing company registered in India will be eligible to participate under the scheme. Participating company will have to undertake processing and operation activities in their own factory premises as prescribed in the scheme guidelines. Only project proposals envisaging processing and operation activities able to enhance value by not less than 60% in integrated fibre/yarn to fabric, garment & technical textiles will be selected. However, for proposal of independent fabrics processing house, this required minimum value enhancement will be only 30%;

(d) Turnover achieved from trading and outsourced job work will not be accounted. The goods which is manufactured by the company registered under the scheme shall only be eligible for the incentives. In other words, goods manufactured by other manufacturer or unit of same group company shall not be accounted for calculation of incremental turnover;

(e) Selection of participating company will be done following a complete transparent process based on objective criteria e.g. relevant experience, financial & technical capacity, size of investment proposed, expected job opportunities creation potential, location of the manufacturing unit etc. The selected applicant (Participant Company) under the scheme will have to maintain separate accounts and balance sheet along with inventory of inputs and sales data of production under the Scheme;

(f) Only one company of a group will be allowed to be registered for PLI for Textiles and none of their other group companies will be eligible for participation in this scheme as a second participant. However, the group may make more than one (1) application for consideration but they will have to take a decision at the time of selection regarding the proposal they want to take forward in case more than one (1) of their proposals are shortlisted on the basis of transparent selection process;

(g) This Scheme does not preclude beneficiary for duty remission/duty exemption/duty neutralization provided by Government of India or for making application for State Government schemes;

(h) This scheme shall not be a permanent feature for the industry. The scheme is to support creation of a viable enterprise and competitive industry. So, only competent, sustainable industry players are to be supported through the scheme;

(i) The total fund outgo and duration of the scheme is fixed. In case of availability of funds, entry of new entrant in the scheme period will be allowed till 2022-23. In such cases, investment should be completed by FY 2023-24 and production must be started in FY 2024-2025 for receiving incentive for 5 years’ duration. In case the prescribed conditions are not met in time, the incentive will be available for a lesser number of years but rate of incentive will be applicable as prescribed to first year of the scheme and so on for remaining period;

(j) In case any participant company fails to achieve the required turnover target in any of the years during scheme period, they will not get any incentive under this scheme for that year. However, incentive will be provided on achieving the prescribed target in subsequent years but within the scheme period. Such participants will get assistance for reduced number of years and at rates as explained in para(i) above.

6. SCHEME DURATION:

The scheme shall be valid upto 2029-30. The gestation period for both parts of the scheme will be of two (2) years i.e. FY: 2022-23 to FY: 2023-24.