1. The policy has attracted around Rs 20,000 crore of investment in four years and created 2.5 million jobs
2. The government offers interest subsidy of five percentage points on new plant and machinery for value addition
3. The state extends financial support of 50% (up to Rs 30 crore) for establishing a textile and apparel park
4. Gujarat has been the largest producer and exporter of cotton in the country
The Gujarat government's decision to extend its textile policy by a year could attract Rs 5,000 crore of investments in sectors across the value chain. Implemented in 2013, the policy has attracted around Rs 20,000 crore of investment in four years & created 2.5 million jobs, half to rural women, says the government.
According to government estimates, in the last four years, one million spindles were added in the spinning sector, and over 1000 units came up in technical textiles manufacturing. According to Siddhartha Rajgopal, Executive Director, The Cotton Textiles Export Promotion Council, "We have witnessed a shift of textile units from Tamil Nadu, Telangana and Maharashtra, into Gujarat. The extension would see a further boost in fresh investment."
The policy extension is expected to add 300 ginning units taking the total number of units to 1,400 in the state, and double the spinning capacity to four million a year. Investments would also flow into technical textiles, silk, jute and wool sectors.
Gujarat has been the largest producer and exporter of cotton in the country, at 33% and 60%, respectively, of the national total. Under the policy, the state government offers interest subsidy of five percentage points on new plant and machinery (P&M) for value addition, apart from 6% & 7% for technical textiles and on new P&M for cotton spinning, respectively. Also, refund of value added tax (VAT) on expansion of existing units from cotton to garments and made-ups, in addition to power rate concession on new investment for cotton spinning at a rupee a unit.
The government also extends financial support of 50% (up to Rs 30 crore) for establishing a textile and apparel park, and a maximum of Rs 10 crore for other technical parks. "Fresh investment here would impact flow of investments into other states," believes R K Dalmia, President, Century Textiles and Industries.
Following the success of Gujarat's textile policy, other states have followed suit. Maharashtra has announced the setting up a number of textile parks in Vidarbha. Tamil Nadu, Andhra and Telangana have also announced incentives for setting up of new textile units. However, Gujarat has an advantage in terms of strategic location near large consumer markets and in ports for export.