Centre halves investment thresholds, expands eligible MMF & technical-textile lines and relaxes new-company rules to widen participation and boost exports

New Delhi

The Ministry of Textiles on Thursday notified significant revisions to the Production-Linked Incentive (PLI) scheme for the textile sector, cutting eligibility barriers and widening product coverage to attract more investment into man-made-fibre (MMF) apparel, MMF fabrics and technical textiles. The changes — effective from August 1, 2025 — reduce minimum investment thresholds, relax the requirement to form new companies and add several HSN codes to the eligible product list, officials said.

What the notification changes

The official Press Information Bureau release and subsequent ministry notification outline several headline measures:

• Lowered minimum investment: For new applicants the minimum investment in the Part-1 category has been halved from ₹300 crore to ₹150 crore, while Part-2 minimums fall from ₹100 crore to ₹50 crore.
• Expanded product scope: The scheme now includes additional HSN codes — eight for MMF apparel and nine for MMF fabrics — broadening the range of garments and fabrics that can claim incentives.
• Relaxed corporate structure rules: Applicants may set up project units within existing companies rather than being forced to form new entities, a move intended to make it easier for established players and groups to apply.
• Reduced incremental turnover criteria: The amendments lower the incremental turnover thresholds that applicants must achieve to qualify for incentive slabs, making it easier for medium and smaller firms to meet performance targets.

Officials framed the package as a practical recalibration to expand coverage, deepen domestic manufacturing of value-added MMF products and accelerate exports of technical textiles. The PLI for textiles — launched in 2021 with an outlay of about ₹10,683 crore — targets higher value-added manufacturing and aims to cut import dependence while scaling exports.

Why the changes were made

The ministry said the amendments respond to industry feedback that existing thresholds and some structural requirements constrained participation — particularly for smaller firms and regional players. Industry bodies had argued that the original thresholds favoured very large corporates and discouraged smaller manufacturers and clusters from applying. By easing the investment and turnover bars and expanding eligible product lines, the government aims to democratize access to incentives and catalyse capacity expansion across more regions.

The changes come as the government also extended the application window for fresh proposals to December 31, 2025, allowing additional time for interested companies and smaller enterprises to prepare dossiers and secure financing. Earlier extensions and a flurry of new proposals over recent months signalled strong industry interest that policymakers want to convert into projects on the ground.

Industry reaction: cautious optimism

Trade associations and textile firms welcomed the move but cautioned that implementation details and clarity on rule-books would determine the real impact. “Lowering the entry barrier is a welcome step — it will bring more MSMEs and regional manufacturers into the fold — but prompt, transparent processing and timely disbursal of incentives will be critical,” said a senior industry executive (who declined to be named). Analysts say easing the requirement to form new legal entities should unlock applications by conglomerates that prefer to house new PLI projects as units inside existing structures.

Banks and financiers also welcomed the expanded eligibility, saying that reduced thresholds would make it easier to underwrite projects and structure debt financing for medium-sized players. Lenders noted that project viability still hinges on supply-chain competitiveness, power, and logistics support at the state level.

Export and employment implications

Government officials expect the revisions to accelerate investments into MMF value chains and technical textiles — segments identified as high potential for exports and higher margins. MMF apparel and fabrics have become strategic as global brands shift sourcing away from certain geographies and seek alternative suppliers with scale and compliance credentials.

Experts say a successful uptick in PLI-driven manufacturing could boost exports, generate employment in factory and support services, and help upgrade local raw material and ancillary supplier ecosystems. However, they stressed that state governments’ cooperation on land, utilities, and training, plus robust vendor development programs, will be necessary to translate policy changes into factory floor growth.

Implementation challenges and next steps

While the policy direction is clear, observers flagged several implementation challenges:

• Project appraisal and monitoring: Faster approvals must be matched by rigorous appraisal to prevent unviable projects from consuming fiscal space.
• Timely incentive payouts: Delays in incentive calculation or disbursal could deter investors despite improved eligibility.
• Cluster readiness: Many textile clusters need upgrades in power, logistics and compliance infrastructure to host scaled projects.
• Credit access: MSMEs will require easier access to affordable credit to meet the upfront capital thresholds now lowered but still substantial for many smaller players.

Ministry officials said guidelines and clarifications would be issued on timelines and application norms, and workshops were being scheduled to guide applicants through the revised scheme. The PLI portal is open for applications and help desks are providing daily virtual clinics for prospective applicants.

Broader policy context

The amendments come amid a broader government push to strengthen manufacturing onshore, reduce dependence on imports and capture higher value in global textile supply chains. In parallel, the Centre has used tariff adjustments and export promotion measures to complement incentive schemes. The textile sector lobby has been active in seeking pragmatic changes to ensure PLI benefits reach a wider swathe of industry participants beyond a few large groups.

Bottom line

By trimming investment floors, relaxing corporate formation norms and expanding eligible product lists, the government has made the PLI scheme for textiles markedly more accessible. The policy tweak aims to broaden participation, boost MMF and technical-textile output, and accelerate exports — but converting amended rules into jobs, factories and export orders will require swift implementation, financing support and state-level facilitation.

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