The government in Maharashtra says its new textile policy has attracted investment commitments of Rs 360 billion, compared to Rs 200 billion assured for the neigbouring state of Gujarat, a ready alternative for manufacturers.
To restore Maharashtra's place as a prime hub in this regard, eroded over recent years, the state government has decided to offer a primary capital subsidy of 25-40 per cent across the value chain. Also, area-wise and sector-specific incentives, such as 10 per cent of additional subsidy and lower electricity rates for setting up units across under-developed regions.
"The state produces 8.2 million bales (170 kg each) of cotton, of which only a fourth is consumed within the state. The remaining quantity is supplied to spinning mills in other states. By contrast, Tamil Nadu produces only 0.5 mn bales of cotton but processes around 10.5 mn bales, by procuring the fibre from other states because of cheaper electricity. We want the remaining three-fourth of unprocessed cotton to be processed within the state, for which we have offered an electricity rate lower by Rs 2-3 a unit. In addition, capital subsidy for setting up a plant and machinery, across the value chain. We are confident of Maharashtra attracting massive investment in the sector," said Atul Patne, secretary (textiles).
Apart from the conventional textile business, the government has also offered incentives for pollution-free and eco-friendly dyeing and processing plants. Non-conventional yarn like bamboo, banana, ghaypat, ambadi, coir and maize has also been identified for incentives to make yarn. It has also offered to set up a textiles university and a Textiles Development Fund with initial corpus of Rs 300-400 crore.
Gujarat, Andhra, Telanagana and Jharkhand are among those which offer wage incentives for new textile units. These go up to Rs 5,500 a month for skilled workers. "For garment units, cost of production and viability remain a major concern. With wage incentives, the cost of production declines; there is no mention of this in Maharashtra's policy. Hence, garmenting units would find Gujarat a preferred destination," said Rahul Mehta, president, Clothing Manufacturers Association of India.
The Union ministry of textiles has also announced a special package of Rs 71.5 billion, a 19 per cent increase from its earlier one of Rs 60 bn. However, key issues like early refund of the goods and services tax and remission of state levies remain unresolved for the entire textile industry.