The Indian government has announced a INR106.8bn (USD1.46bn) production linked incentive scheme for the textile industry to help the sector rebound after the Covid-19 disruption, create over 750,000 additional jobs and boost ancillary business.
Promise of fresh investments
The government revealed in a statement it expects the incentive scheme will attract fresh investments in the textile sector to the tune of INR109bn and additional production of more than INR3trn over the next in five years. The scheme is devised in a manner that prioritises benefits for smaller towns and cities.
The latest scheme is for manufacture of man-made apparels and fabrics, and 10 other products of technical textiles.
“The incentive structure has been so formulated that industry will be encouraged to invest in fresh capacities in these segments. This will give a major push to growing high value man-made fibre segment which will complement the efforts of cotton and other natural fibre-based textiles industry in generating new opportunities for employment and trade, resultantly helping India regain its historical dominant status in global textiles trade.”
Further incentive schemes to come
The scheme for textiles is part of the overall announcement of schemes for 13 sectors the government announced earlier in February for a total of INR1.97trn. The government expects these schemes to generate over INR37.5trn of production and over 10 million new jobs over the next five years.
“This will help bridge gaps in India’s textile ecosystem, aligning Indian production to the global demand for man-made fibre and technical textiles. Globally, man-made fibre accounts for bulk of the apparel demand, while the Indian supply-chain is skewed towards cotton apparel, with cotton apparel accounting for 55% of India’s cotton apparel exports,” said Pavethra Ponniah, senior vice president, corporate sector ratings, ICRA Limited.
Large states like Gujarat, Maharashtra, Tamil Nadu and Punjab are likely to benefit the most from the scheme, the government has said.