Telangana sops for textile sector a wake-up call for Tamil Nadu

Telangana is known for its production of long staple cotton, with annual production of 60 lakh bales

The Telangana government has announced new incentives to attract investments in the textile and apparel sector, in what could be a wake-up call for the Tamil Nadu government to prevent a chunk of investment from shifting. 

Telangana has offered 1,000 acres of land for a mega textile park, besides a plug-and-play model for easy operation of these units. The state’s capital and operational incentives will be applicable for new as well as existing units for the next five years. It has also warned if the units are not adequately compensating the workers, they would face action.

Telangana is the largest producer of cotton in the southern region and has around 17 per cent share in India’s total cotton production. 

The development comes three months after K T Rama Rao, Telangana Chief Minister K Chandrasekhar Rao’s son, visited Tirupur, the knitwear capital of India, and textile city Coimbatore. Tamil Nadu accounts for one-third of the $120 billion Indian textiles industry. 

“The Telangana government’s decisions and implementations are in a good speed. It is high time for the Tamil Nadu government to wake up for the situation,” Raja M Shanmugam, president of Tirupur Exporters Association, said, adding that there were few takers for Telangana. 

In Telangana, the value-added tax (VAT)/state goods and services tax (SGST) reimbursement will be available for tax collected on end product or intermediates within the entire value chain to the extent of 100 per cent for a period of seven years from the date of commencement of commercial production or up to the realisation of 100 per cent fixed capital investment, whichever is earlier.

A capital subsidy of 25 per cent will be provided for conventional textile units and 35 per cent for technical ones involved in production of medical textiles, geotextiles, agrotextiles and protective clothing, among others. For units attracting Rs 200 crore or above investment or providing more than 1,000 jobs, the incentives will further be customised. A capital incentive of 20 per cent of cost of plant and machinery up to Rs 5 crore per unit will be provided to existing units for modernisation and adoption of advanced technologies. 

An operational assistance of up to 75 per cent will be extended towards interest rates, against loans availed for setting up these units over a period of eight years. Power subsidy, ranging from Rs 1-2 per unit, will be provided depending on the size of each industry up to five years. 

Subsidies will be provided on industrial water supply, environmental conservation infrastructure, and infrastructure like roads, power and water. Under the Telangana State Skills Development Mission, the government will provide subsidies towards capacity building and skill development support to facilitate reputed institutions involved in textiles-related training programmes to set up their permanent centres in the state.

Telangana is known for its production of long staple cotton, with an annual production of about 60 lakh bales. However, processing and value addition to cotton in the state is largely limited to ginning and pressing.