The Cabinet on Wednesday approved the production-linked incentive (PLI) scheme worth Rs 10,683 crore for textiles sector with an aim to boost domestic manufacturing and exports. The decision was taken in a meeting which was chaired by Prime Minister Narendra Modi. The Cabinet "has approved the PLI scheme for textiles for MMF (man-made fibre) apparel, MMF fabrics and ten segments/ products of technical textiles with a budgetary outlay of Rs 10,683 crore," Textiles Minister Piyush Goyal told reporters.
'A change we have seen after the Russia-Ukraine war is the energy crisis in Europe.' 'Earlier, in Europe, people used to change their clothes after 5 washes, now they are using it till 15-20 washes.' 'They used to change their entire wardrobe after 2 months or so, but because of the economic conditions, it has changed.' 'It has affected exports as 40% of our exports is to Europe, 30% to the US and 10% to the UK.' 'The war has to end for better days to come.'
Backed by the 'China Plus One' sentiment globally, India's textile exports is expected to grow by 81 per cent to $65 billion by 2026 from the pre-Covid level of around $36 billion in 2019, said a report by the Confederation of Indian Industry (CII) and global consulting firm Kearney. This jump is likely to generate 7.5-10 million new jobs. A large chunk of this targeted increase, or around $16 billion may come from the China Plus One sentiment due to India's relatively large strategic depth compared with Vietnam or Bangladesh, the report said.
Heeding to demands made by several states, the GST Council on Friday put on hold a decision to hike the tax rate on textiles to 12 per cent and referred to a panel of state ministers to recommend rate by February, Union Finance Minister Nirmala Sitharaman said. The panel, the highest decision-making body for indirect taxes, met under emergency provisions after states made a request for deferring the tax rate hike on textiles, from the current 5 per cent, to be effective from January 1, 2022. Currently, the tax rate on manmade fibre (MMF) is 18 per cent, MMF yarn 12 per cent, while fabrics are taxed at 5 per cent.
Experts said the rate hike would improve working capital position of the manufactures as it would correct the inverted duty structure but may lead to increase in price of the finished goods.
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