India Opens Round 4 of Textile PLI Scheme with Revised Incentives and Turnover Thresholds

The central government has announced amendments to India’s Production Linked Incentive (PLI) Scheme for Textiles in a notification issued on 28 October 2026. Through the 2026 amendments, the Union Ministry of Textiles aims to address implementation-related challenges and provide greater flexibility to businesses seeking incentives for investments in man-made fibre (MMF) textiles and technical textiles.

It primarily introduces revised investment and turnover thresholds, differentiated incentive structures under two scheme categories, provisions allowing existing participants to migrate to the fourth application round (Round 4), and an extended implementation timeline. Round 4 of the registration and application window is now open on the official website between 1 November and 31 December 2026.

It should be noted that the detailed operational guidelines incorporating the 2026 amendments will be issued separately. These guidelines are expected to provide further clarity on the implementation of the revised provisions.

India PLI Scheme for textile: Revised investment and turnover threshold in Round 4

India’s 2026 amendment for textile PLI establishes two categories under the scheme, with different minimum investment and turnover requirements. Both thresholds must be met for a company to qualify for incentives.

Scheme Part I

Under Part I, eligible applicants must meet the following criteria:

• Invest at least INR 1.5 billion in plant and machinery, equipment, and civil works
• Exclude land and administrative building costs when calculating eligible investment
• Achieve a minimum turnover of INR 6 billion through the manufacture and sale of products covered under the notified MMF and technical textile categories

The incentive structure is as follows:

1. Performance Year 1: Companies receive an incentive of 15 per cent on turnover, subject to achieving the prescribed minimum turnover
2. Performance Years 2-5: PLI applicants/companies must achieve at least 10 per cent incremental turnover compared to the previous year’s turnover
3. Declining incentive rate: The incentive rate decreases by one percentage point annually, starting at 14 per cent in Year 2 and reaching 11 per cent in Year 5

Scheme Part II

Part II provides a lower investment and turnover threshold, making the scheme accessible to applicants with comparatively smaller investment plans.

Eligible applicants must meet the following criteria:

• Invest at least INR 500 million in plant and machinery, equipment, and civil works
• Exclude land and administrative building costs from eligible investment
• Achieve a minimum turnover of INR 1 billion through the manufacture and sale of notified MMF and technical textile products

The incentive structure is as follows:

1. Performance Year 1: Companies receive an incentive of 11 per cent on turnover, subject to achieving the prescribed minimum turnover
2. Performance Years 2-5: PLI applicants/companies must achieve at least 10 per cent incremental turnover over compared to the previous year’s turnover
3. Declining incentive rate: The incentive rate decreases by one percentage point annually, starting at 10 per cent in Year 2 and reaching 7 per cent in Year 5

Common condition

Under both categories, only sales transacted through normal banking channels will qualify for calculating eligible turnover and incentives.

Migration of existing textile PLI participants to Round 4

Amendments to the textile PLI scheme allow existing participating companies from Rounds 1, 2 and 3 to migrate to Round 4, subject to specific conditions.

Companies that have not claimed or received any incentives under their existing applications can opt for Round 4. However, they must withdraw their existing applications under the earlier rounds, as applicable, to become eligible for migration.

This provision gives existing participants an opportunity to participate under the revised investment and incentive framework rather than continue under their earlier application conditions.

Treatment of investments already made by migrating applicants

Recent changes also clarify how investments made before Round 4 will be considered when calculating eligible investment for companies migrating from earlier rounds.

The following provisions apply:

1. Eligible investment period: Investments made between 24 September 2021 (the date the PLI Scheme was introduced) and 31 March 2026 will be considered at their actual cost.
2. Condition for investment recognition: This treatment applies where the applicant has not commenced production or generated turnover from the investment.
3. Depreciation adjustment: If production or turnover has already commenced, depreciation on the capitalised assets will be charged for the period from 1 April 2026 to 31 March 2027.
4. Depreciation calculation: The depreciation rate will be determined in accordance with the Companies Act, 2013.

These provisions are specifically intended for applicants migrating from earlier rounds. They do not apply to new applicants applying directly under Round 4.

Extension of the textile PLI scheme implementation period

The amendment extends the PLI Scheme’s implementation timeline for Round 4 participants until FY 2033-34. FY 2032-33 will be the final performance year, while FY 2033-34 will be the final year for claiming incentives.

The revised implementation schedule provides two years of gestation before the commencement of the five performance years.

Scheme period	Financial year
Gestation Year 1	FY 2026-27
Gestation Year 2	FY 2027-28
Performance Year 1	FY 2028-29
Performance Year 2	FY 2029-30
Performance Year 3	FY 2030-31
Performance Year 4	FY 2031-32
Performance Year 5	FY 2032-33
Final incentive claim year	FY 2033-34

The corresponding incentive claims will be made in the financial year immediately following each performance year. For instance, incentives for FY 2028-29 will be claimed in FY 2029-30.

What the PLI scheme amendments mean for textile manufacturers and investors

Indi’s revised framework has several implications for businesses considering investments in India’s MMF and technical textile segments.

1. Greater flexibility in investment planning: The introduction of two investment categories, with thresholds of INR 1.5 billion and INR 500 million, provides different entry points for businesses with varying investment capacities.
2. Performance-linked incentive structure: Companies must meet both the minimum investment and turnover requirements. They must also demonstrate at least 10 per cent incremental turnover growth annually from Performance Year 2 onwards to qualify for subsequent incentives.
3. Migration opportunities for existing participants: Companies that have not claimed or received incentives under earlier rounds can consider migrating to Round 4, subject to withdrawing their existing applications.
4. Recognition of historical investments: Eligible investments made between 24 September 2021 and 31 March 2026 can be considered at actual cost for migrating applicants, subject to the conditions governing commencement of production or turnover and depreciation.
5. Longer implementation and investment horizon: The two-year gestation period, followed by five performance years, gives participating businesses additional time to establish production capacity. It can also help companies achieve the prescribed turnover thresholds.

India PLI Scheme for textile: Progress & performance as of March 2026

As of 31 March 2026, the central government has approved 170 companies under the PLI scheme for textiles.

India PLI Scheme for Textile – Target Segment Projections
Target segment	Number of applicants	Investment (value in INR)	Turnover (value in INR)	Employment
MMF fabrics	38	60.87 billion	408.65 billion	32,557
MMF apparel	43	76.13 billion	644.35 billion	214,665
Technical textiles	89	278.32 billion	1.69 trillion	120,205
Total	170	415.33 billion	2.75 trillion	367,427

Source: PLI, Ministry of Textile, Government of India

These companies had collectively recorded actual investments of approximately INR 81.17 billion and generated 33,427 jobs across various states and union territories.

Quantum of Investments & Employment in India via PLI Scheme for Textile (as of 31 March 2026)
S. no.	States/union territories	No. of companies	Actual investments (in INR)	Actual employment
1	Gujarat	46	19.03 billion	4493
2	Madhya Pradesh	22	6.58 billion	4970
3	Maharashtra	24	1.67 billion	904
4	Uttar Pradesh	15	46.3 million	–
5	Tamil Nadu	17	12.77 billion	7930
6	Karnataka	6	15.15 billion	5611
7	Rajasthan	6	2.199 billion	1139
8	Punjab	6	–	–
9	Dadra & Nagar Haveli	6	2.37 billion	1310
10	Andhra Pradesh	5	1.70 billion	2619
11	Haryana	6	13.6 million	6
12	Telangana	2	3.62 billion	258
13	West Bengal	2	–	–
14	Assam	1	24.9 million	–
15	Goa	1	13.55 billion	692
16	Odisha	2	–	–
17	Himachal Pradesh	1	28.5 million	30
18	Bihar	2	2.37 billion	3465
	Total	170	81.17 billion	33,427

Source: PLI Scheme, Ministry of Textile, Government of India

In addition to the investments and employment generated, the central government estimates that the scheme will contribute to a cumulative turnover of approximately INR 2.75 trillion and exports of around INR 537.98 billion.

Conclusion

Overall, the amendment recalibrates India’s textile PLI framework by introducing differentiated investment thresholds, revised incentive rates, migration provisions and an extended implementation timeline. Companies planning to participate in Round 4 should assess their investment commitments, projected turnover, production timelines and eligibility conditions before applying. They should also monitor the Ministry of Textiles’ detailed operational guidelines for further clarification.