Three years on, only 40 SITP projects take off

Dec 04 2008, 02:22 IST
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SummaryThree years after the government launched the Scheme for Integrated Textile Parks in 2005 to cash in on the opportunities thrown up by the expiry of the Multi-Fibre...

Three years after the government launched the Scheme for Integrated Textile Parks (SITP) in 2005 to cash in on the opportunities thrown up by the expiry of the Multi-Fibre Agreement, only three of the 40 approved projects have fully taken off.

Alarmed by the poor progress, the Project Approval Committee (PAC) for SITPs is scheduled to meet this month to cancel the approval for at least 4-5 projects. These are part of eleven SITP projects where less than 40% of the proposed infrastructure has been built. Another eight projects have 40-60% of the planned infrastructure.

SITPs were expected to increase India’s textile exports to $50 billion by 2010. The original estimation was that at least 25 projects would go on stream by the end of 2007-08. Now, the government only expects four parks to come up by the end of December, and six by March 2009. The special purpose vehicles (SPVs), formed to supervise the development of parks, “are delaying obtaining statutory clearances for land use and environment,” a government official said. Also, firms that are interested in setting up units in the parks are not getting enough funds from financial institutions.

“Banks are acting really cautious in lending to the industry due to the limited funds. The industry is also hesitant in shifting their units to these parks under the present circumstances when the confidence is low. As a result, infrastructure development of 4-5 projects has been hit and these projects have to be cancelled,” the official said. Projects stuck due to ‘genuine problems’ would be handled ‘sympathetically.’

Peeved by the slow development, textiles secretary A K Singh had early this year shot off a letter to developers asking them to expedite the process, but the same did not bear any fruits. “The letter is now being followed by talks with the developers and financial institutions,” the official said.

The industry says textiles firms are not undertaking fresh investments due to falling profitability with lower demand in the domestic and international markets. “Firms are operating at below capacity and are not investing to increase the production strength as exports have fallen and consumption in the country is going down. New investment had stopped last year itself when the rupee started appreciating against the US dollar,” Confederation of Indian Textiles Industries secretary-general D K Nair said.

According to latest figures released by the government, overall exports fell by 12.1% in October to $12.8 billion from $14.6 billion in the same month last year. This fall follows 10.4% growth of exports in September, against an average growth of 35% in the first five months of this fiscal. “The government should take steps to boost exports,” Nair said.

Some firms are also pulling out of the existing parks due to falling sales. “I had invested in Netaji Apparel Park in Tirupur, but closed shop late last year. The park did not give me any visible advantage,” Kaytee Corporation managing director Premal Udani said.

SITP was launched after integrating two schemes, namely Scheme for Apparel Parks for Exports and the Textile Centre Infrastructure Development Schemes. Before the formation of SITP, only one park—Netaji Apparel Park—was operating under the earlier schemes.

The projects approved under the scheme were expected to generate employment for over nine lakh people at an aggregate investment of Rs 21,050 crore. The total investment includes Rs 4,198 crore of development cost, of which Rs 1,437 crore would be the government support and the rest had to be contributed by the factory owners.

Parks that have been inaugurated under SITP are Palladam Hi-Tech Weaving Park in Tamil Nadu, Pochampally Handloom Park in Andhra Pradesh and Doddaballapur Integrated Textiles Park in Karnataka. Palladam Hi-Tech Weaving Park has got an investment of Rs 247 crore and has provided employment to 5,000 people, while textiles units have invested Rs 45 crore and employs 5,000 people.

Doddaballapur Integrated Textiles Park has received investment of Rs 160 crore and recruits 5,000 people. The biggest investment has been seen by still-to-be-inaugurated Brandix India Apparel City at $1 billion (around Rs 5,000 crore). It employs 60,000 people. The government has already released Rs 400 crore as part of total grant.

Of the 40 projects, six were proposed to come up in Andhra Pradesh, one in Assam, seven in Gujarat, ten in Maharashtra, six in Tamil Nadu, four in Rajasthan, one in Karnataka, two in Punjab, one in Uttar Pradesh, two in West Bengal.

In 11 SITP projects, less than 40% of the proposed infrastructure has been built. Another eight projects have 40-60% of the planned infrastructure

SITPs were expected to increase textile exports to $50 billion by 2010

The original estimation was that at least 25 projects would go on stream by the end of 2007-08

Now, the government only expects four parks to come up by the end of December, and six by March 2009

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