The Union cabinet on Wednesday cleared the production-linked incentive scheme (PLI) for textiles worth Rs 10,683 crore but the focus is exclusively on high-value man-made fibres and technical textiles leaving nothing for labour-intensive cotton and other natural fibre-based textiles such as jute.

Analysts said the scheme would help only big players to a certain extent and the incentives appeared like a knee-jerk reaction to increased shipments from China.

Union textiles minister Piyush Goyal said the incentives will encourage the industry to invest in fresh capacities in man-made fibres and technical textiles. It will complement the efforts of cotton and other natural fibre-based textile industries in generating new opportunities for employment and trade, he said.

Under the scheme, the government is offering incentives between 3 per cent and 11 per cent on incremental production.

Trade analyst Biswajit Dhar of the JNU said: “The PLI scheme is part of the government’s Make in India programme, which emerged to counter increased dependence on Chinese imports. The scheme does not focus on increasing competitiveness and productivity but confines itself to production numbers.”

“In the past, the industry has pitched for protectionist measures from the government whenever they have failed to compete in the global market. Given that the scheme encourages specialised textiles, it would benefit big corporate and the factories would employ highly skilled manpower and automated production lines.”

Poll-bound Uttar Pradesh and Punjab are expected to benefit from the scheme. Goyal said states such as Maharashtra, Andhra Pradesh, Telengana, Gujarat and Odisha will also benefit .

Blow to auto

The government is believed to have slashed the outlay for the automobile sector under the PLI scheme to about Rs 26,000 crore and the proposal is expected to be approved by the cabinet soon, sources said.

Last year, the government had announced a PLI scheme for the automobile and auto components sector with an outlay of Rs 57,043 crore, earmarked for five years.

The sources did not disclose the reason for the revision, but said the focus is now more on battery electric and hydrogen fuel cell vehicles.