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NEW DELHI : Companies looking to avail benefits  announced under productivity  linked incentive (PLI) scheme for the textile sector will have to set up a separate company and invest between 100-300 crore for manufacturing approved products in the government’s incentive list. 

The Centre on Tuesday finalised the operational guidelines for the PLI scheme in the textile sector which also makes it contingent upon companies to return a turnover 200 and 600 crore depending on the type of manufacturing before getting incentives under the scheme.

The Government approved the PLI Scheme for Textiles, with an approved outlay of 10683 crore over a five year period, to promote production of MMF (man-made fibre) Apparel, MMF Fabrics and Products of Technical Textiles in the country.  

The operational guidelines for the PLI scheme further makes it mandatory on participating companies to achieve both turnover and minimum investment to have any chance of getting incentives. It has provided two year gestation period to companies from FY23 to FY24 to set up activities qualifying for incentives that will flow from third year (performance year) ie FY25 only if requisition turnover on notified items is achieved. 

The incentive will be available for a period of five years between that will succeed each follow each performance year and run between FY26 and FY30. Companies achieving targeted turnover in later years could claim incentives only for the balance period of operation of the PLI scheme. 

Ministry of Textiles will accept online applications under the scheme from January 1, 2022. The application window will remain open from between January 1-31, 2022.

The rate of incentive under the PLI would be 15 per cent for Part 1 ( 600 crore turnover) of the scheme that will come down by 100 basis points in each of five years (FY25-29) with last year providing incentive of 11 per cent. Similarly, part 2 of the scheme will provide incentive of 11 per cent in the first performance year and 7 per cent in the last year. 

Participants will get incentive only when they achieve both, i.e. the prescribed turnover target for the year and 25 per cent increase in turnover over immediate preceding year’s turnover, in subsequent year for reduced number of years, the guidelines for the scheme said.

There will be a provision of cap of 10 per cent over and above the prescribed minimum incremental turnover growth of 25 per cent 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 the cap of 10 per cent will be applied over and above turnover of two times of the investment made under the Scheme up to 2024-25. Turnover achieved beyond two times of investment + 10 percent shall not be accounted for calculation of incentives in Year 1. This shall apply to both Schemes Part 1 & 2.

A selection committee headed by Secretary Textiles and having other officials from the ministry and DPIIT  and NITI Aayog will evaluate the proposals from companies interested in participating innthe PLI scheme.

The scheme will also be flexible to allow change in ownership of original applicant but incentive will only flow on achievement of prescribed incremental turnover after completion of benchmark investment for the successor company.

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