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Even as India’s textile sector slumps, Gujarat maintains 18% growth rate

Despite an overall slump in India’s textile sector, Gujarat has performed remarkably well through policy support from both the Centre and state government. This is evident from the fact that while exports from the country’s textile sector have remained stagnant over the last two years, the state has registered a consistent growth.

By: | Ahmedabad | Updated: September 23, 2016 6:43 AM
textile re 660 Gujarat, which has been a hub for the textile industry since the 19th century, has been very active in availing TUFS as compared to other states. (Reuters)

Despite an overall slump in India’s textile sector, Gujarat has performed remarkably well through policy support from both the Centre and state government. This is evident from the fact that while exports from the country’s textile sector have remained stagnant over the last two years, the state has registered a consistent growth.

Speaking to FE, officials of the Textile Commissioner’s regional office in Ahmedabad said, “Gujarat has maintained a consistent growth of nearly 18% over the past decade since 2004. Unlike several other states, entrepreneurs in Gujarat have the option of availing benefits from both the Centre and the state government, allowing for additional benefits.” The Centre’s Technology Upgradation Fund Scheme (TUFS), along with the state government’s policy, has helped entrepreneurs reap huge benefits in the sector.

Currently in Gujarat, there are 144 composite mills including those for spinning, 897 cotton ginning and processing units, 22 surgical cotton units, 2,362 units for processing of readymade garments, 362 units for technical textiles, 513 power processing units and 1,146 hand processing units, of which 95% are located in Rajkot. Additionally, Gujarat also currently has 60 home textile units and 5,053 preparatory units for weaving.

City-based consultant (textiles) Dr PR Roy, said, “Exports from the country have been stagnant over the last two years at about $41 billion. The industry is not performing up to expectations, despite policy support. The scope and opportunities for the textile sector are major, but industrial performance has been limited. Industries need to do a lot more in order to beat international competition from countries like China.

However, there has been a huge growth in home textiles in regions like Anjar and Vapi, owing to companies like Welspun coming into the state.”

Gujarat, which has been a hub for the textile industry since the 19th century, has been very active in availing TUFS as compared to other states. According to records maintained by the regional office here, of 5,136 applications made for 15% of capital subsidy scheme, nearly 87% originated from Gujarat. Of the Rs 230.11 crore subsidy disbursed, 75% was to units and entrepreneurs in Gujarat.

The capital subsidy scheme also allows for 20% and 30% subsidy exclusively for weaving units. For the former, nearly 28% of 4,267 applications were from Gujarat while 25% of Rs 382.02 crore subsidy was disbursed to units in Gujarat. Under the 30% subsidy scheme, about 46% of 441 applications hailed from Gujarat and nearly 50% of the Rs 178.03 crore was also disbursed in Gujarat.

“There has been more investment in spinning due to support by the government. While the Centre has cut down its support for spinning now, the state government continues to support it. Since the Gujarat government’s last policy for the textile industry in 2013, spinning units have increased manifold. Gujarat is also at an advantageous position in the textile industry over states like Tamil Nadu, due to its position as the largest cotton-growing state,” Roy said.

The Amended Technology Upgradation Fund Scheme (ATUFS), which was cleared by the Cabinet Committee on Economic Affairs in December 2015, saw the government focussing on the apparel, garment and technical textiles by providing a 15% capital investment subsidy, subject to a ceiling of R30 crore over five years. Entrepreneurs in other sub-sectors are eligible for subsidy at a rate of 10%, subject to a ceiling of Rs 20 crore.

The officials said, “Spinning has developed in a huge way as have export orders over the years. Exports rose especially in 2013, when spinning units in China were shut down.”

In 2013, the Chinese government’s cotton stockpiling policy had forced domestic prices to rise by 40% above world levels, forcing traders to import yarn from India and Pakistan.

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