Context: Recently, Cabinet has approved a new five-year Production Linked Incentive (PLI) scheme for the textile industry, which covers items from the MMF (man-made fibre) and technical textiles sectors.
About the Scheme

• The scheme is aimed at promoting industries that invest in the production of 64 select products. 
• The product lines include 40 in man-made fibre apparel, 14 in man-made fibre fabrics, and 10 technical textile segments/products. 
• The investment period is two years, and the incentive will be paid for five years after the first year of post-investment operation. 

Key highlights

• PLI scheme for textiles is part of overall announcement of PLI schemes for 13 sectors made during the Union Budget 2021-22 with an outlay of Rs 1.97 lakh crore.

Budgetary outlay: Rs. 10,683 crores.

• Aim: To provide a major boost to domestic production and exports of synthetic fibers and technical textiles.
• The approved incentive of 3-11% of annual incremental revenue will be provided to eligible units over a period of five years.

Eligibility:

For eligibility under the scheme, two types of investments are possible.

• Any person (which includes firm/company) willing to invest a minimum of Rs 300 crore in plant, machinery, equipment and civil works to produce products of notified MMF fabrics & technical textiles, shall be eligible to apply for participation in first part of the scheme.

In the second part, any person, firm or company, willing to invest minimum Rs100 crore shall be eligible to apply.

• Factories based around aspirational districts or Tier-3 & Tier-4 cities will be given priority.
• It will especially benefit Gujarat, Uttar Pradesh, Maharashtra, Tamil Nadu, Punjab, Andhra Pradesh, Telangana etc.
• It is expected to generate an additional direct employment of 7.5 lakh and indirect employment of several lakhs more.

Difference between Textile and Fibre

Textiles are materials or fabrics. They are made of tiny fibers that can be man-made or come from nature, those fibers are then twisted into yarns, and the yarns are then woven or knit into a fabric.

• Now that we know what are textiles, we can dive into fibers. A fiber is a very thin, hair-like structure. Actually, your hair is technically a fiber. Fibers are so tiny that we measure them in microns. A micron is equal to one, one-thousandth of a millimeter (1/1,000). They are generally much, much, longer then they are wide. The differences in the fibers chemical composition and, molecular and physical structure, give a fiber its performance characteristics.  
• Fibers are usually twisted together to form yarns, and yarns are then woven or knit to form fabrics.

Types of fibre
1. Synthetic or man-made fibers (MMF)

• They are made by chemical synthesis, as opposed to natural fibers that are directly derived from living organisms.
• MMFs such as nylon, polyester, acrylic, rayon, viscose and polyolefin dominate global apparel production.
• They account for 75% of all fibers produced worldwide, and 80% in developed markets such as Europe and North America.
• Applications: Clothing, carpets and household textiles, tyres, conveyor belts, cold-weather clothing, air and water filters.

2. Technical textiles

• These are materials and products manufactured primarily for their technical and performance properties rather than their aesthetic or decorative characteristics.
• Applications: Automobiles, civil engineering and construction (roads, railway tracks), agriculture, healthcare, industrial safety, personal protection, military and disaster management.
• In India, Technical textiles segment is estimated at $16 billion or 6% of $250-billion global market.

Why the stress on man-made fibre?

• The scheme focuses on the man-made fibre segment to enable the Indian textile and clothing sector to regain its dominant status in the global textiles trade. 

Currently, Indian production and export of textile and clothing products are largely cotton-based. 

• In 2018-19, while Indian textile and clothing exports amounted to about $36 billion, less than one-third was man-made fibre-based. 
• In contrast, of the total textile and clothing exports by China, it is estimated that almost 80% are man-made fibre-based. 

Similarly, of the total global fibre manufacturing and consumption, 70% is man-made fibre-related, while in India it is just about 35%. 

• Annual textile and clothing exports have remained largely stagnant over the last seven years, and stuck in the range of $30 billion-$35 billion. 
• India is ranked sixth in the global trade in this sector. 
• Added to this, in recent years, countries including Bangladesh and Vietnam have gained a sizeable share in the man-made fibre segment of the global textile trade, making it all the more vital for India to provide policy support to ensure the country remains competitive internationally. 

Though the final list of products eligible for the scheme is yet to be notified, it is expected that most of the top globally traded man-made fibre product lines in which India’s share is less than 5% will be covered.

How will it impact traditional textiles such as jute?

• The scheme will not impact traditional textile segments such as jute or cotton. 
• It has minimum investment thresholds and select product lines and hence targets a limited number of players. 
• The traditional segments have a large number of industries spread across micro, small and medium enterprises and large-scale operations. 
• They will continue to invest and grow in the fields they are strong in.

Will the scheme help lower dependence on imports?

• During 2018-19, the import of man-made fibre garments jumped 39% from the previous year, while the import of the man-made fibre yarn, fabrics, and made-ups rose 16%. 
• With the government recently removing the anti-dumping duty on viscose staple fibre and Purified Terephthalic Acid, most man-made fibre is now available in India at internationally competitive prices. 
• With an incentive to invest in production too, Indian manufacturing of man-made fibre value-added products is expected to increase and thus bring down imports, especially of man-made fibre apparel and fabrics, from countries such as China and Bangladesh.

Road Ahead

• The government has said the scheme will help attract Rs19,000 crore of fresh investments and generate 7.5 lakh jobs. The expectation is that it will motivate industries to make fresh investments in the select product lines and scale up capacities. 
• Global retail brands, which are present in India and sourcing man-made fibre-based apparel from other countries, are likely to start sourcing from India once the garments become available at internationally competitive prices.