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Government to lower turnover and investment thresholds in draft PLI scheme


The government plans to lower the turnover and investment thresholds, and include cotton-based products, according to its draft Rs 10,683-crore production-linked incentive (PLI) scheme. The scheme aims to offer 11 per cent incentive to large companies for investments over Rs 500 crore in Greenfield projects in technical textiles. However, the companies to record an incremental turnover of Rs 1,500 crore in the first year and a 25 per cent rise in turnover each year after that.

Firms with an annual turnover of Rs 100-500 crore will receive an incentive of 9 per cent for brownfield projects. This will be subject to an increase in turnover 50 per cent each year. Similarly, companies with a turnover of Rs 500 crore or more will be granted a 7 per cent incentive in the first year. However, the turnover has to increase by 50 per cent in the first year and by 25 per cent each year after that. The incentives in all the categories will be trimmed by 100 basis points each year after the first year and granted for a total of five years starting FY22.

The draft PLI scheme marks a paradigm shift in the government’s decision-making on two counts. First, it earmarks big bucks for big companies, shedding its long and costly bias towards small businesses. Second, it seeks to correct India’s historical policy preference for a cotton-dominated value chain, which is contrary to the global trend. The idea is to reclaim India’s export markets after ceding substantial ground to Bangladesh and Vietnam in recent years.