The Government of India has recently selected locations in Tamil Nadu, Telangana, Karnataka, Maharashtra, Gujarat, Madhya Pradesh, and Uttar Pradesh to establish new textile parks under the PM Mega Integrated Textile Regions and Apparel (PM MITRA) scheme. These parks, set to be complete by 2026-27, represent a total investment of Rs 4,445 crore. However, the initial allocation in the Budget for 2023-24 stands at Rs 200 crore.
Designed to operate in a Public Private Partnership (PPP) model, each PM MITRA park will be developed by a Special Purpose Vehicle (SPV) owned jointly by the Central and State Governments. The parks will boast features like incubation centres, common processing houses, design and testing centres, and common effluent treatment plants.
For implementing the project, an SPV will be set up for each park. The Ministry of Textiles plans to offer financial support in the form of Development Capital Support up to Rs 500 crore per park. There will also be Competitive Incentive Support (CIS) up to Rs 300 crore per park towards speedy implementation. Additionally, these parks will benefit from convergence with other Government schemes.
Significance of the PM MITRA Scheme
The PM MITRA Scheme aims to reduce logistics costs and strengthen the Textile Sector’s value chain to make it globally competitive. It is expected that an investment of Rs 70,000 crore into these parks can generate employment for about 20 lakh people. These parks hold potential to attract Foreign Direct Investment (FDI).
Between April 2000 and September 2020, India’s textile sector received Rs 20,468.62 crore of FDI, which was just 0.69% of the total FDI inflows during the period. Experts believe that the cluster-based approach will reduce increased wastage and logistical costs, thereby improving the competitiveness of India’s textile sector.
Current Scenario of the Textile Sector of India
India’s textile sector is a pivotal part of its economy, contributing over 2% to the total GDP and more than 12% to the manufacturing sector GDP. It has a diverse value chain ranging from fibre to readymade garments. It is the 2nd largest employment provider in the country, after agriculture, employing approximately 45 million people directly and another 60 million indirectly.
Despite its potential and status, the textile sector faces several challenges. The production of textiles, as per the Index of Industrial Production (IIP), has been consistently declining since March 2022. There’s been a surge in imports of textiles despite India being the 6th largest exporter of textiles worldwide, causing a negative impact on local industries. Additionally, the disadvantage of duties imposed by importing countries and an Inverted Duty Structure pose further challenges.
Government Initiatives in the Textile Sector
Various initiatives have been introduced by the Indian Government to revitalize the textile sector. These include the Amended Technology Upgradation Fund Scheme (ATUFS), Scheme for Integrated Textile Parks (SITP), SAMARTH Scheme, Power-Tex India, Silk Samagra Scheme, Jute ICARE, and the National Technical Textile Mission.
The Directorate General of Trade Remedies (DGTR) has also recommended levying Anti-Dumping Duty (ADD) on VSF imported from Indonesia. This came to light after investigations revealed that imports from Indonesia increased following the lifting of this duty.
For the future, experts suggest that the sector needs to be made more organized through the setting up of mega apparel parks and common infrastructure for the textile industry. There is also a need for modernization of obsolete machinery and technology. A comprehensive blueprint for the textile sector is needed to guide its future growth.
