Tamil Nadu, India’s leading state for textile and apparel, had its assembly election recently. To allure the industry, various political parties made interesting promises to focus on various demands of the industry. On the other hand, the State Government took a big step in mid-February and announced its Industrial Policy 2021 and MSME Policy 2021.The policies have been framed keeping textiles in focus and also intend to meet global standards for ease of doing business.
Notably, Tirupur (India’s number one cluster in knitted garments) will be benefited through the Industrial Housing Projects. These projects will be developed through PPP models.
Through ‘Think MSME First’, priority is being given to the development of MSMEs to ensure a level playing field under the schemes, laws and procedures applicable to them.
It is insisted in the policies that the MSME department will strengthen the Cluster Development Initiative and proposal to extend extra support to clusters.
The capital subsidy; incentive for scaling up; interest subsidy scheme for Technology Upgradation/CGTMSC Scheme; NEEDS including upgradation of upskilling and reskilling of workers are some of the key attractions of these policies.
It is also important to state here that the incentives will encourage more start-up units and it will be utilised by Tirupur knitwear sector’s stakeholders’ units.
Textile is amongst the focus sectors under Industrial Policy 2021. Readymade garments, Technical Textiles and Medical Textiles, Industry 4.0 are included in the thrust sector enterprises eligible for special capital subsidy under MSME Policy, whilst Technical Textiles and Medical Textiles are also identified as sunrise sectors under industrial policy;polyester, nylon and rayon fibres are under enterprises/activities not eligible for incentives.
The MSME policy targets to increase the share of exports from the MSMEs in the state by 25 per cent. The policy will provide exposure to state-of-the-art technology and support adoption of Industry 4.0. It will facilitate the promotion of Export Hubs in the districts after analysing the export potential in the districts in coordination with DGFT.
Apparel export industry of the state has welcomed these steps. Raja M. Shanmugham, President, Tirupur Exporters’ Association (TEA), believes that these policies will pave way for the growth of industries in Tamil Nadu.
Raja said that Industrial Housing Projects is the need of the hour for Tirupur cluster.
“The incentives provided to MSMEs will help in the growth of Tirupur knitwear sector. Incentives especially equity participation through a designated Fund Management Company (FMC) and 20 per cent of the total expenditure incurred on SME IPO will help in the speedy growth of the units,” he said.
New MSMEs and start-ups will get benefit
New MSMEs and start-ups will be exempted from approvals for establishment and operation for a period of three years based on self-certification subject to the condition that the unit shall have mandatory approval within a period of one year from the expiry of the 3-year period.
New/existing small enterprises undertaking expansion or diversification of their projects whilst mortgaging and hypothecating their assets will be eligible for a rebate/reimbursement of 50 per cent of the stamp duty. In case of micro enterprises, this will be 100 per cent.
All aspects are taken into consideration
Another good thing about the policies is that these policies have tried to cover all aspects be it CSR, logistics, warehousing, etc.
There is focus to encourage CSR funding for research relevant to MSMEs including setting up Centres of Manufacturing Innovation in top educational institutions.
Industrial policy says that logistics and warehousing facilities shall be allowed to operate 24 X 7.In industrial policy, most of the leading clusters of Tamil Nadu like Coimbatore, Tirupur, Erode, Karur and Salem are under ‘B’ category districts. This is with regard to mainly administering the fiscal incentives.
Projects in B category districts will get Fixed Capital Subsidy of 10 per cent on large, 12 per cent on mega and 22 per cent on ultra-mega projects, respectively. This is more than ‘A’ category but less than ‘C’ category.
Majority of Tamil Nadu’s textile and apparel manufacturing industry are in the MSME category and thousands of job workers (subcontractors/fabricators) are working under them. Since these job workers are the backbone of the industry, so MSMEs should benefit them in good way.
On the other hand, there are thousands of large scale vertical integrated textile mills, apparel export houses also in the state, so industry policy will add value to their overall business.
Looking at the current business scenario and hardships, Government support is the most important thing. Though Tamil Nadu’s apparel industry is still dependent on migratory labour, with these new policies of the State Government, Tamil Nadu will be able to grow and textile and apparel industry will also flourish.