Mad­hya Pradesh: A tex­tile hub of un­re­alised potential

New gar­ment pol­icy could be the game changer Pol­icy is in­vest­ment-friendly and pro-em­ploy­ment gen­er­a­tion

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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.

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