Textile policy extension: Gujarat eyes ~5,000-crore investment

The Gujarat government’s decision to extend its textile policy by a year is set, it believes, to attract ~5,000 crore of more investment in sectors across the value chain.

Implemented in 2013, the policy has attracted around ~20,000 crore of investment in four years and created 2.5 million jobs, half to rural women, says the government. The year’s extension was announced early this month. The government estimates addition till now of a million units of spindle capacity in the spinning sector and setting up of over 1,000 units in technical textiles.

“There has been shifting of units from Tamil Nadu, Telangana and Maharashtra. The extension would see a further boost in fresh investment,” said Siddhartha Rajagopal, executive director, The Cotton Textiles Export Promotion Council.

The extension is expected to add 300 ginning units, to 1,400, and double the spinning capacity to four million a year. Apart from setting up of units in other segments, such as technical textiles, silk, jute and wool. Gujarat has been the largest producer and exporter of cotton in the country, at 33 per cent and 60 per cent, respectively, of the national total.

Under the policy, the state government offers interest subsidy of five percentage points on new plant and machinery (P&M) for value addition, apart from six per cent and seven per cent for technical textiles and on new P&M for cotton spinning, respectively. Also, refund of value added tax on expansion of existing units from cotton to garments and made-ups, in addition to power rate concession on new investment for cotton spinning at a rupee a unit.

The government also extends financial support of 50 per cent (up to ~30 crore) for establishing a textile and apparel park, and a maximum of ~10 crore for other technical parks.

“Fresh investment here would would impact flow into other states, as the policy extension would help in several benefits for players here,” said R K Dalmia, president, Century Textiles and Industries.

Other states have followed Gujarat’s policy to attract flow into this sector. Maharashtra has announced the setting up a number of textile parks in Vidarbha. Tamil Nadu, Andhra and Telangana have also announced incentives for setting up of new textile units. However, Gujarat has an advantage in terms of strategic location near large consumer markets and in ports for export.

“The overall policy was advantageous for attracting investment in the state,” says Rahul Mehta, president, Clothing Manufacturers Association of India.