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The government on Thursday cleared a 4,445 crore scheme to set up seven mega textile parks over five years, seeking to add more jobs in the labour-intensive sector and to make Indian textiles more competitive. Mint takes a closer look at the scheme.

How is the scheme structured?

The seven proposed integrated textile  parks  will  be  held  under  joint ventures (JVs) to be set up between the  Centre  and  the  partnering  state, with the latter holding 51% equity. These JVs will take on board a master developer who will rope in investors to set up production units within the parks and will have real estate development rights within the park. The developer will get 25-year lease of the park and this could be extended by another 25 years. The Centre will give viability gap funding for infrastructure development within  the  park  to  the developer and a ‘competitiveness incentive’ to the production units in the park.

What does the scheme mean for the industry?

The textile and apparel industry in India  is  deeply fragmented and due to past policies including those meant for protection of small-scale industries, could not scale up. The effort of the government is to break this bottleneck and to help this sector grow and achieve global competitiveness. The Prime Minister’s Mega Integrated Textile Region and Apparel (Mitra) scheme is a key step in this regard. Unlike the production-linked incentive (PLI) scheme recently announced for man-made fibre segment, the Mitra scheme is open to all segments of the textile and apparel industry. This also includes technical textiles.

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How long does it take to set up these parks?

That will depend quite a bit on how state governments come up with the required land—at least 1,000 acres of contiguous land—and offer the utilities for the project. The fund allocation is made envisaging a five-year utilization period. Given that 10 states showed interest before the scheme was formally announced, the Centre would have to evaluate all the proposals.

Could it make textiles more competitive?

One of the key factors affecting the global competitiveness of India’s textile and garment exports is the logistics cost given that this industry is fragmented. Having mega integrated textile parks could be an answer to this. The scheme is a much-needed step towards helping businesses to scale up and to make value-added products leveraging the abundant raw material resources available in the country, said Ajay Kumar Mall, managing director of Mallcom India Ltd, a personal protection gear maker.

What are the benefits for businesses?

All benefits offered by states either under their textile policy, if they have one, or under their industrial policy will be available to the units coming up in Mitra. This is in addition to the benefit of tax refund offered by the Centre to exporters under the Rebate of State and Central Taxes and Levies scheme, said textile secretary Upendra Prasad Singh. The taxes that do not get refunded in the normal course for exporters, are covered too. Investors can opt for either the ‘competitiveness incentive’ or benefits under the PLI scheme.

 

 

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