Last week, the Union Cabinet had approved the scheme with a budgetary outlay of Rs 10,683 crore. The scheme, designed to boost India’s production and trade of man-made fibre (MMF), garments, and technical textiles, is expected to result in fresh investments of more than Rs 19,000 crore in five years.
“The clear advantage is that this could help increase turnover. The entire MMF chain will stand to benefit. We are still not 10 per cent of what China produces. Only time will tell how many units will actually be able to take advantage of this scheme,” says Suresh Khurana, chief executive officer (CEO)-polyester staple fibre, Bombay Dyeing.
The textile sector is worried about the stringent parameters, including the Rs 600-crore turnover and targets of additional incremental turnover of 25 per cent over the preceding year. Khurana adds that for the garment sector, an investment of Rs 300 crore and achieving a turnover of Rs 600 crore may be somewhat higher targets to accomplish.
There are two types of investment possible under different sets of incentive structure. Any company willing to invest a minimum Rs 300 crore in plant, machinery, equipment, and civil works, excluding land and administrative building cost, to produce MMFs and technical textiles, will be eligible to participate in the first part of the scheme.
In the second part, any company willing to invest a minimum Rs 100 crore will be eligible to participate.
According to the scheme, the incentive in the subsequent years will be provided on achieving a minimum additional incremental turnover of 25 per cent over the immediate preceding year’s turnover up to the fifth year. However, incentive will be reduced by 1 per cent every year, from second year onwards till the fifth year.
“The stringent part is the company will have to grow revenue of 25 per cent on-year. The idea is to encourage the industry to get into new investments. Our company is into MMF flooring. We had business plans and are revisiting them. The scheme will help speed up investment plans,” says Mukesh Savlani, CEO, Welspun.
Harish Bapna, president of Wellknown Polyesters, believes the government should push for an integrated model wherein every aspect of the sector, including yarns, weaving, knitting, garmenting and processing, comes under one roof.
“Earlier, the government's focus was mainly on cotton. The sector was largely ignored. MMF is required to boost exports and support the Make In India initiative. It will help medium-scale and quasi-large-scale entrepreneurs to commit to new investments. Raw material is available in India, but forward integration is missing,” adds Bapna.
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