Of all the production linked incentive (PLI) schemes, the one for the textile sector was most awaited since this sector accounts for a large part of India – 7 percent of industrial output, 2 percent of gross domestic production (GDP) and 12 percent of export earnings.
It employs 4.5 crore people, nearly 10 percent being handloom workers. But the textile PLI scheme just announced does not include cotton, it is for manmade fibre, fabric and apparel and for technical textiles.
Expectedly, the government has set aside Rs 10,683 crore, which will be given as incentives in 2 categories. Those who are investing in plant and machinery more than Rs 300 crore and those who are investing from Rs 100-299 crore.
An investment of Rs 19,000 crore is expected in 5 years, Rs 3 lakh crore of output to get incentives of Rs 10,683 crore. On a per-year basis, the government is expecting Rs 4,000 crore of investment which should give the industry Rs 60,000 crore of output and if they generate Rs 60,000 crore of output, they will get Rs 2,130 crore of incentive every year.
It is expected to generate 7.5 lakh jobs in 5 years, or 1.5 lakh jobs a year. If you do the math, it works to about Rs 1 crore generating 38 jobs.
The manmade fibre industry has been largely stagnant. Figures as of 2018 indicate manmade fibre was growing at 0.2 percent per year, yarn was contracting at 2.1 percent; and the fabric was contracting at 2.8 percent a year.
Technical textiles – for which the incentive is given, is not clothes. It is divided into segments like agrotech, meditech, buildtech, mobiltech, clothtech, packtech, hometech, protech, indutech, sportech. That is products like PPEs, seat covers, tarpaulins, seat belts, parachute material. India's market size is around $20 billion and domestic consumption is low compared to advanced countries. Those are figures provided by Technopak.
Arvind Singhal, Chairman, Technopak Advisors and Mukesh Savlani, CEO, Welspun Flooring discussed this further.
"Technical textile is a very heavy technology and capital-intensive business to be in and that has been one area where Indian companies have not been able to make a big impact,” said Singhal.
Welspun Flooring is part of manmade technical textile. “So, at Welspun, we are concentrating on technical textiles,” said Savlani.
“India has been a cotton-centred manufacturing hub while elsewhere in the world cotton textiles are going down, they are degrowing and synthetic and manmade fibre stuff is growing. The size of the manmade fibre industry worldwide is three times the size of the cotton industry, so it was about time, the government of India pitched in and an incentive scheme will definitely help kickstart the manmade fibre ecosystem both on the technical as well as in the apparel side in the country,” Savlani explained.
Welspun Flooring has already planned the expansion plan. “We are going back to the drawing board. This scheme has induced more investments and this will enable us to speed-up our journey towards global domination in the flooring industry and technical textiles in the world,” he said.
For the entire discussion, watch the accompanying video.