From the last one month, in India’s textile industry, the talk of the town is Mega Investment Textiles Parks (MITRA), as in her budget speech, Union Finance Minister Nirmala Sitharaman officially launched this scheme. Under this scheme, 7 textile parks will be established over 3 years.
One of the main reasons or purpose behind this scheme is to make the Indian textile industry globally competitive and attract large investments. At the same time, it will naturally boost employment generation and exports.
Though as of now, the fine print of the scheme is not in the public domain but Government has said that its main features will be to create a world-class infrastructure with plug-and-play facilities to enable build global champions in exports.
Each of these parks will encompass 1,000+ acres of land with modern state-of-the-art infrastructure, common utilities, R&D Lab, workers’ family accommodation and plug-and-play facilities under consideration.
Terming it as a game-changer for the Indian textiles industry, Union Textiles Minister Smriti Irani is very enthusiastic about this scheme. In her words, “Emphasis on state-of-the-art infrastructure through MITRA will give our domestic manufacturers a level-playing field in the international textiles market and pave the way for India to become a global champion of textiles exports across all segments.”
But an important question here is whether these parks will be successful or not. This doubt arises because so far despite the best effort of MoT, its Scheme for Integrated Textiles Parks (SITP) which was launched in 2005 has not given desired results, and in this scenario, how far will the MITRA initiative be successful is debatable.
Is it not surprising that it took full 3 years for the Government to come up with this scheme?
A report by MoT in 2017 had said that SITP has failed to achieve its objectives and the reasons which were cited for the same were small size (most of the parks spanned from 25 to 75 acres) of the parks and lack of marketing support from the Government. Each such park under the scheme was supposed to normally have 50 units.
As per official data, SITP had been under implementation since 10th five-year plan (2002-2007) to provide the textile industry with world-class infrastructure facilities. The project cost covers common infrastructure and buildings for production/support depending on the needs of the ITP with the total financial support of 40 per cent of the project cost subject to a maximum of Rs. 40 crore.
So far around 59 textile parks have been sanctioned under SITP, out of which only 22 were completed, even less than half. The development of 11 parks got cancelled mainly due to land-related issues such as delay in conversion, clearances, disputed lands and even non-availability.
Bodies across states lobbying hard
Irrespective of the reasons, across states, various trade bodies, State Governments are lobbying to get at least one park in their state. For example, the Madhya Pradesh Government has proposed 1,000 acres of industrial land for such a park in Ratlam.
Union Law and Justice Minister Ravi Shankar Prasad recently assured he would make sincere efforts to persuade the Textiles Ministry to set up a textile park in Bihar.
For Gujarat also, the Southern Gujarat Chamber of Commerce and Industry (SGCCI) has urged the Finance Minister for the establishment of MITRA in Surat. It is being said that SGCCI had submitted an expression of interest (EoI) to the MoT for establishing a mega textile park on 1,000 acres of land in Surat in December 2020.
In favour of this initiative, it is being said that this is in line with the Government’s intention to encourage mega projects and increase the scale of operations. A particular positive aspect of this scheme is the incorporation of ‘Plug and Play Model’ which will enable the members of such parks to avoid huge capital expenditure outlays.
Plug and Play Model’s advantage is that it offers a ready-to-use basic infrastructure and the investor need not struggle or work to develop the same. It saves a lot of time and eases the process.
The above-mentioned report, which stated that SITP failed, has suggested that MITRA should have readymade factory sheds, warehouses, incubation centres and testing labs, with express connectivity to seaports and airports.
One of the leading trade bodies has insisted that the Government should very closely study why textile parks have not really succeeded in the past.
It is very crucial to avoid errors of omission and commissions in the past. Otherwise, one more well-intended scheme will fail to lift the fortunes of the industry.
It is also pertinent to mention here that these new parks will be most probably near the ports; in India, such textile clusters and ports are in cities like Chennai, Mumbai and Vishakapatnam.
More or less, these states have saturation from labour availability point of view which is a big concern for at least the apparel manufacturing industry. Apparel manufacturing giants are moving away from states like Tamil Nadu mainly due to labour issue.
Is it possible that an apparel giant will start its big unit where labour is migratory? Most recently Tirupur’s vertical integrated giant company Best Corporation has started construction of its new factory in Ujjain (Madhya Pradesh) and the main reasons for the same are the availability of local workers and land offered by the State Government on 75 per cent subsidy compared to market rate.
But it is also pertinent to mention here that post-Covid, labour housing is also the need of the hour and every apparel manufacturing hub is insisting on Government support on the same.
MITRA scheme has an option for labour housing that can be a hit and trial because so far apart from Tamil Nadu, few factories like that of Shahi Exports have successful hostel facilities for their workers.
Secondly, an entire ecosystem, right from ensuring the raw material availability to mid-level professionals is also a must and very difficult to establish in a new area. So far only Brandix India Apparel City, Vishakapatnam has been successful in this regard and its total credit goes to Brandix. This park is also a perfect example of foreign investment in such textile/apparel park.
Netaji Apparel Park, Tirupur is also one example where apparel manufacturers are working properly and the park is quite beneficial. Apart from good infrastructure of park, proximity with the main city and solar plant are also a few big attractions of this park.
Another big foreign investment in any Indian textile park is by Youngone Corporation, a Korean company, which has announced to invest Rs. 900 crore in Kakatiya Mega Textile Park (KMTP) at Warangal, Telangana. Its operations are expected to start soon. It is being said that soon more Korean companies will be investing in this park. One of the biggest reasons for this successful investment is the State Government’s aggressiveness.
The MITRA scheme is targeting to have large capacities at one place as each of such parks will be in 1,000+ acres of land. On the other hand, it is also pertinent to mention that from last few years, the concept of mini textile park is in discussion. The hubs or states where large scale textile-parks are not successful or the trade bodies don’t have resources to manage a large textile park prefer to opt for mini textile parks. Normally these parks require an area of 10 acres and have at least 10 production units. Such initiatives also have support from various State Governments. But overall there are no enthusiastic results achieved from these mini textile parks.
It can be highlighted here that internationally, the textile parks are not less than 100 acres; however, in India several approved parks are smaller than 25 acres.
India has missed the opportunity once again as during US-China trade war and strong anti-China segment, not even a single Chinese company invested in India. One can hope that now with these initiatives, at least a few global manufacturers will invest in India. And for that, one of the most important things to focus upon is good infrastructure. SITP was also launched to provide the industry with state-of-the-art world-class infrastructure facilities for setting up their textile units, but still India is struggling to have good infrastructure.
There are enough chances that with the suggested support infrastructure which includes 18 points right from readymade factory sheds/flatted factories to warehouse, dormitory and much more… MITRA will be successful. All stakeholders will now probably learn from the experience of the unsuccessful SITP.