Cabinet approves 7 parks under 'PM-Mitra'; Centre to provide capital support of Rs 4,445 cr over 5 years, states to pitch in with land
India’s high-potential but highly fragmented and underachieving textile industry will get a shot in the arm with the Union Cabinet approving a scheme of seven mega textiles-and-apparel parks, to be supported by both the Centre and the respective state governments.
The Centre will incentivise creation of these facilities, aimed at building scale across the textiles-to-garments value chain via generous capital support to build common infrastructure; states will pitch in with the requisite land, likely in areas close to sea ports. The Centre would make a total outlay of Rs 4,445 crore for the scheme, titled Pradhan Mantri Mega Integrated Textile Region and Apparel (PM-Mitra), over five years, minister for textiles Piyush Goyal said.
The proposed mega parks will be equipped with plug-and-play facilities over large areas – each of at least 1,000 acres of land parcels that are contiguous and encumbrance-free – and would create direct employment of 7 lakh and indirect employment twice that number, the minister said.
“The parks will be located in seven states which will be selected based on competition among them to provide maximum facilities such as cheap land, electricity and water as well as simpler labour compliance procedures,” Goyal said. Tamil Nadu, Punjab, Odisha, Andhra Pradesh, Gujarat, Rajasthan, Assam, Karnataka, Madhya Pradesh and Telangana are among the states that have already expressed interest in the scheme.
The scheme was first announce in the last Budget and FE has recently reported the details of the scheme.
The parks will house all sorts of textile and garment firms, including integrated facilities, to create a robust eco-system. The government feels that PM-Mitra will complement the recently-approved Rs 10,638-crore production-linked incentive (PLI) scheme for man-made fibre and technical textiles segments.
Despite having a strong raw material base that consists of both cotton and synthetics, and an abundant and relatively less expensive labour, India has in recent years been ceding export market share in textiles and garmets to much smaller economies, such as Bangladesh and Vietnam.
PM-Mitra parks will be developed by special purpose vehicles which will be jointly owned by state government concerned, the Centre and the private investors. The Master Developer will not only develop the industrial park but also maintain it during the concession period, the government said in a statement.
Development Capital Support (DCS) of maximum of Rs 500 crore will be given to all greenfield PM-Mitra parks. A sum of Rs 300 crore will also be provided as competitiveness incentive support for early establishment of textiles manufacturing units.
For brownfield sites, DCS of 30% of project cost of balance infrastructure and other support facilities will be given subject to a cap of Rs 200 crore. This is in a form of viability gap funding to make the project attractive for participation of private sector.
The government is open to giving support to more such mega textile parks. Textiles secretary UP Singh had told FE earlier: “Seven mega parks will be set up in the first phase. However, if a greater number of states, who are willing to offer land, approach us for the setting up of the parks, we will undertake a ‘challenge method’ to select the top seven of them, using certain criteria.”Such mega parks will be able to better draw overseas buyers by offering a broad range of products and cater for large orders, given the greater synergy among its resident entities, he had said.
The mega parks are the latest in a series of attempts made by the government to promote formalisation and build scale in the labour-intensive sector that has been hamstrung by millions of small units, supported by lackadaisical official policies for decades. Consequently, an overwhelmingly large percentage of firms, with very limited financial and operational heft to handle bulk orders, are scattered across the country, stunting its ability to raise exports exponentially and grab the space being vacated by China in this segment.
When India finally removed some of these shackles (by removing SSI reservation between 2001 and 2005, allowing fixed-term employment in garments in 2016, scrapping an anti-dumping duty on a key input for polyster staple fibre in the Budget for FY21, etc), low-cost economies such as Bangladesh and Vietnam — in addition to dominant China — had consolidated their positions in the world market and beaten India.