Madhya Pradesh: A textile hub of unrealised potential
New garment policy could be the game changer Policy is investment-friendly and pro-employment generation
It is really ironic that at a time when a majority of the industry is fighting a battle for survival, with expansion not even being a remote thought, State Governments across the country are fighting a battle to attract investments from the textile value chain. Many of the new destinations like Odisha and Jharkhand are pulling all plugs to announce apparel-specific policies and are promising many incentives, including wage support for fresh workers over a certain period of time. However, there are many other destinations that have a history of textiles but have not really grown significantly with latent potential that has not been fully explored. Among some such top names that comes to mind is Madhya Pradesh.
Home to 4% of cotton grown in the country, Madhya Pradesh is also the production centre for many big textile mills, including Vardhman, Trident, Raymond, Century Textiles, Grasim, SRF, SEL, Maral Overseas, to name a few. Underlining the main factors why MP was the choice for expansion many years ago, Harish Chatterjee, Vice President – Manufacturing, Raymond explaines, “We started the plant in the year 1990 and at that time the capacity was around 7.50 million metres per annum. This particular location was selected on the basis of cheaper land, labour and textile policy giving other benefits like TUF. We also got exemption in payment of Commercial Tax (Entry Tax, VAT & Sales Tax) and other taxes for a period of five years. This area had clusters of handloom weavers and hence majority of local workers were familiar with textile, particularly weaving. Also, the location is in mid of the Chhindwara and Nagpur state highway, with Nagpur only 55 km. away from our site so road transport, air services, trains are convenient for our employees.”
Many years onwards, the state has lost its sheen, and though the companies working in the state are doing well, the opportunities for future growth are a question mark. Taking cognisance of the same, the State Government has recently announced plans to upgrade the existing apparel clusters at Indore and Jabalpur, as also a textile park in Chhindwara. Among the big projects coming up, Trident Group has announced its plan to set up a mega industrial textile hub at Budhni, where Vardhman is already having a textile unit. Setting up of the textile hub will entail an investment of Rs. 6,250 crore (US $ 965.4 million) and will generate employment for 16,500 persons. Companies that have a presence in the state are satisfied with the administrative support they are getting from the Government. “It is easy to approach the highest level of all authorities, including the Chief Minister in MP and all the required help and guidance is given by the industrial department for setting up a new plant,” shares Harish, though he quickly adds that the state has lost focus on the textile industry, which could be a disadvantage as many new states are now raising the bar on benefits.
In the meanwhile, to attract investment into the textile sector, the Government has provided an interest subsidy for five years at the rate of 5% for textile projects and 7% for composite textile projects. Furthermore, the Government has committed to provide100% assistance in plant and machinery for eight years under Industrial Investment Promotion Assistance Scheme. “We feel that there is a scope for more textile industries to establish base in MP, so that the benefit of available resources is availed and also contributes to the development of the state. But still we feel that the state can do more in the area of establishment of technical institutions, like ITI and Polytechnic so that sufficient manpower can be trained and employment can be generated,” avers Neeraj Jain, Joint Managing Director, Vardhman.
Garment production, the fresh focus…
Indore, the cluster of the readymade garments industry with over 1,260 garment units, has been identified for infrastructure development under the Textiles Centre Infrastructure Development Scheme (TCIDS). Pratibha Syntex, the biggest garment exporter in the state, is based out of Indore and has been in dialogue with the State Government on the important elements that should be included in the final garment policy, the two important aspects being – reimbursement of high manpower cost, and secondly refund of capital investment in the form of capital subsidy. With labour wages increasing substantially, contract manufacturing has gained a momentum. “There are too many-unskilled workers in the market and women prefer to do job-work from home, so they don’t need to pay commercial taxes, whereas we have to pay such commercial taxes. So, what we do now is we get the cutting done at our end and give these pieces to the workers for sewing. It’s always a headache to get everything done at our end, so we just give it out on contract work,” reasons
Amit Goyal, Owner, Shubhda Textile, Indore who is struggling to keep his factory running.
Encouragingly the Government has kept ground realities in focus which became evident when the Garment Policy of the Government of Madhya Pradesh was announced on 9th April 2018. M.C. Rawat, Secretary, MPTMA feels that the new policy is very industry-friendly and will certainly attract apparel manufacturers to setup their units in the state. “The Apparel and Made-ups policy announced by the Government of MP is both investmentfriendly and an attractive one. In view of fiscal benefits given, it becomes an add-on advantage of MP; this should be considered by entrepreneurs planning
for investment in the sector,” adds Ashok Jain, VP Commercial, Pratibha Syntex Limited. The already inherent advantages in the state of Madhya Pradesh are land availability in different parts of the state, developed infrastructure, good road, rail and air connectivity, and availability of workforce, ease of doing business in terms of approvals, permissions etc., claims Ashok.
However, the textile policies in MP aren’t as lucrative as in other states, believes Suresh Maheshwari, Deputy Chairman, MPTMA & Director Maral Overseas. “Other state policies are giving more resources, flexibility to the businesses.
The conditions aren’t good to support new businesses here. There is no preferential allotment of land for the manufacturers; big groups still get what they want, but for other mid-size and small players there are no proper land allotments; the rate for clearance is also very high,” he says candidly.
Companies looking at MP feel that industrial area’s infrastructure needs to be improved by proper roads, drainage system, water availability and its treatment, lighting and development of green areas. To get power, the time requirement is very high due to cumbersome procedure. The MP Govt. should try to reduce this time requirement by modifying the system. Labour laws also need to be looked at, as textile is a more labour-oriented unit. “In MP, ID act was replaced with MPIR in textile sector in 2007 and as per the provision of this act, representative character of union is not available, as a result several unions get the opportunity to form or apply for registration and get the power to intervene in the process of collective bargaining and misuse the registration number by not doing the regular duty and other disruptive activities. In this situation, the employer is being faced with lot of difficulties to run the plant smoothly due to multiple unions and applicability of ID act,” shares Harish. There is still much to be done to build confidence of the industry to invest, in
MP. Yet, the first steps have been taken and it will be interesting to see how the state promotes and projects its new policy, as also improves the eco-system to encourage investments. On the positive side, this policy will give a room to expand industries already working in the state and also encourage those industries working in other parts of country. It may convert MP as a hub for apparels and made-ups manufacturing considering the advantages of MP with fiscal benefits.