PLI scheme 2.0 in works for textiles with 'suitable' investment criteria

The government is in the process of formulating a 2.0 version of the production-linked incentive (PLI) scheme for the textile industry, Upendra Prasad Singh, Secretary, Ministry of Textiles, told CNBC-TV18.

As part of PLI 1.0 for the textiles sector, 64 applicants were approved. But to be a successful applicant, the government had sought a minimum investment of Rs 100-300 crore and a minimum turnover of double the investment amount.

“By and large, there is kind of a consensus that next round of PLI should be for apparel and garments, with suitable investment and turnover limits because investment in the garment and apparel is usually less, even though output versus investment ratio is usually pretty high," he said.

This means the minimum investment criteria of Rs 100-300 crore could see a tweak in PLI 2.0 for the textiles sector.

Cotton prices have started softening of late after being high for a while and Singh told CNBC-TV18 that more availability, especially 6-7 lakh bales of summer cotton, will further help correct the soaring prices.

"It's not only cotton prices, almost all raw material prices are high. Cotton prices are high all over the world. Being an internationally traded commodity, cotton prices generally move in tandem with the prices in the international market," Singh mentioned.

"Having said that, prices, of late, have started softening. To give you an example, a common variety of cotton, called Shankar-6 (28-millimeter staple cotton grown in Gujarat) was costing Rs 1,01,500 per candy as of May 20, and now that has come down to about Rs 93,500 per candy," he said.

He added, "About 6-7 lakh bales of summer cotton and some early cotton from northern states like Punjab should mean softening of prices over the next few months till new crops arrive towards the end of September or beginning of October."

The situation in the textile industry became grave when some southern spinning mills shut shop due to the non-availability of cotton at affordable rates. Cotton prices more than doubled in the past year.

He highlighted that overall textile exports witnessed a growth of 8-10 percent for the first two months of FY23, with the apparels and garments segment seeing a growth of 20 percent. However, at the current prices, exports of raw cotton and cotton yarn have witnessed a fall, he said.

The reduction in cotton exports has partially been by design as the domestic industry’s needs are being prioritised and also because, at current prices, exports may not be feasible since the domestic rates are on par with the global prices.

“Yes, right now with this price, raw cotton and cotton yarn, their exports have fallen and one can say that it's required because we need more raw cotton in the country. So, the reduction has been because of the lesser export of raw cotton and cotton yarn but overall textile exports have shown growth,” Singh said.

Singh reassured that there was no dearth of cotton yarn and, with softening of raw cotton, yarn prices will soften as well.