Budget 2025 | Textile industry seeks interest subsidy, lower PLI investment floor in budget

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Subscribe to enjoy similar stories. India's textile industry, a key driver of the economy, employs about 45 million people and contributes significantly to the nation’s exports. As the world undergoes a shift in sourcing patterns, driven by strategies like China-plus-one that seek to diversify supply chains out of China, and disruptions in competing countries such as Bangladesh, India is positioning itself as a global sourcing destination.

However, challenges such as high raw material costs, outdated infrastructure, and the need for modernization persist, requiring targeted policy interventions. Ahead of the Union budget, the industry has high expectations for reforms to boost its global competitiveness. The demands include extending the interest equalization scheme for three years to help exporters remain cost-competitive and revising the production linked incentive (PLI) scheme with lower investment thresholds.

Companies looking to benefit from and participate in the PLI scheme for textiles have to meet either of these two investment thresholds: A minimum investment of ₹300 crore and a minimum turnover of ₹600 crore, and a minimum investment of ₹100 crore and a minimum turnover of ₹200 crore. The interest equalization scheme, introduced in 2015, is a government scheme under which loans to exporters for purchase of raw materials are extended at reduced rates. In September 2021, the government introduced PLI scheme for textiles with an outlay of ₹10,683 crore for 5 years in its bid to promote domestic production of man-made fabric, garments, and technical textiles and cut reliance on imports.