MP to match Maharashtra, Gujarat in luring textile cos

The government of Madhya Pradesh intends to compete with its Gujarat and Maharashtra counterparts in attracting more investment in the textile sector. Maharashtra and Gujarat have policies in place to get units from the north and south to relocate, impelled by problems in the latter, such as power shortage. MP expects to have a similar policy out next month.

“A discussion in this regard is on. The industry wants incentives at par with those available in Gujarat and Maharashtra. The state industry department will soon discuss with the finance department in this regard, as the chief minister had already announced it in the recently concluded Global Investors’ Summit in Indore,” a well-placed source in the department of industry told Business Standard.

The state currently houses a little over 1,200 units and an apparel design centre. Grasim, Raymond and Vardhaman are among the big investors in Madhya Pradesh. In addition to existing incentives, the source said the sector wanted a refund on value-added tax (VAT) paid by a unit on purchases of intermediate products or raw material. Gujarat offers remission of the entire tax collected on end products or intermediate products within the entire value chain from cotton to garments. Further, the industry wants interest subsidy on capital investments without any cap. At present, the state offers two per cent interest subsidy for five years, with a cap of Rs 5 crore. “The industry has demanded this be raised to five per cent, without any limit,” the source added.
 

IN THE OFFING

• New units to get investment subsidy of 10% of eligible capital investment of up to Rs 1 crore
• New units with fixed capital investment of more than Rs 100 crore to get entry tax exemption for 7 years
• Interest subsidy of 2% for five years to be provided up to Rs 5 crore
• 25% subsidy to be provided up to Rs 25 lakh on setting up apparel training institutes

Also, units have asked for financial assistance of up to 50 per cent, with a Rs 10-crore ceiling on total project cost, for establishing common infrastructure facilities. “This facility is again offered in the Gujarat Textile Policy,” the source said. At present, MP offers 10 per cent of the total investment up to Rs 1 crore as grant. It has also exempted textile units that will make an investment of Rs 100 crore in lump sum from entry tax for a period of seven years. It has also committed to offer a 25 per cent grant, to a maximum of Rs 25 lakh, for opening apparel training institutes.

Maharashtra offers 12.5 per cent interest subsidy to mills. It also offers 10 per cent capital subsidy in cotton-growing regions such as Vidarbha, Marathwada and Khandesh. Gujarat also offers seven per cent interest subsidy to mills that want to set up base in the state. It is also refunding VAT on new units, as well as expansion of existing ones, for textiles and readymade garments. It offers concessions in power rates for new cotton spinning and weaving units, financial assistance to skill development centres and technology acquisition for the textile industry. The state also supports energy and water conservation investment.