Why in News?
- Recently, The Centre has selected sites in Tamil Nadu, Telangana, Karnataka, Maharashtra, Gujarat, Madhya Pradesh and Uttar Pradesh to establish new textile parks under the PM Mega Integrated Textile Regions and Apparel (PM MITRA) scheme.
- The parks will be established by 2026-27. The total outlay for the project is Rs 4,445 crore, however the initial allocation in the 2023-24 Budget is only Rs 200 crore.
About PM MITRA Scheme-
- PM MITRA Park will be built by a Special Purpose Vehicle which will be owned by the Central and State Government and in a Public Private Partnership Mode.
- Each MITRA Park will include incubation centre, common processing house and a common effluent treatment plant and other textile related facilities like design centres and testing centres.
- Implementation-
- Special Purpose Vehicle- An SPV owned by the Centre and State Government will be developed for each park which will supervise the implementation of the project.
- Development Capital Support- The Ministry of Textiles will give financial assistance in the form of Development Capital Support upto Rs 500 crore per park to the park SPV.
- Competitive Incentive Support (CIS)- A CIS upto Rs 300 crore per park to the units in PM MITRA Park shall also be provided to incentivise swift implementation.
- Convergence with other Schemes- Convergence with other Government of India schemes shall also be facilitated in order to ensure additional incentives to the Master Developer and investor units.
Significance of the Scheme-
- Reduce Logistics Cost- It will decrease logistics costs and reinforce the value chain of the Textile Sector to make it globally competitive.
- High logistics costs are considered a major hurdle to India’s goal of increasing textile exports.
- Employment- An investment of Rs 70,000 crore into these parks can create employment for around 20 lakh people.
- Attract FDI- The parks are vital to attract Foreign Direct Investment (FDI). During April 2000 – September 2020, India’s textile sector received Rs 20,468.62 crore of FDI, which is just 0.69% of the total FDI inflows during the period.
- Competitiveness- This cluster-based approach will lower the increased wastage and logistical costs of the sector, and thus will enhance the competitiveness of the country’s textile sector.
Scenario of the Textile Sector of India-
- Status- The textile sector is one of the critical sectors of the Indian economy, accounting for more than 2 percent of the total GDP (Gross Domestic Product) and more than 12 percent of the manufacturing sector GDP.
- The textile sector has a diverse value chain spread across fibre to readymade garments.
- Potential- The sector is the second largest provider of employment in India, after agriculture.
- It gives employment to an estimated 45 million people directly and to another 60 million indirectly through allied activities.
- India is the 6th largest exporter of textile and apparel in the world, with 4 percent share of the global trade in textiles and apparel.
- India’s textile and apparel exports (as well as handicrafts) stood at USD 44.4 billion in FY22, a 41% increase YoY.
- India’s textiles industry has about 4.5 crore employed workers involving 35.22 lakh handloom workers across the country.
Challenges-
- Decline in Production- The production of textiles as measured by the Index of Industrial Production (IIP) for textile has seen a consistent reduction since March 2022.
- The index value, which was 118.5 (March 2022), has fallen to 102.3 in October 2022.
- Surge in Imports- During April to November 2022, imports of textiles were valued at Rs 433 billion, same as last year they were valued at Rs. 313 billion.
- In 2006, India permitted duty-free import of readymade garments from Bangladesh under the South Asian Free Trade Agreement (SAFTA), resulting in an increase in imports of apparels made with Chinese fabrics and yarns.
- Exports Suffer- India suffers from the disadvantage of duties being imposed by the importing countries.
- Countries such as Bangladesh, Sri Lanka and African countries get duty-free access and make India’s textiles comparatively less competitive in the international landscape.
- Inverted Duty Structure- The Man-Made Fibre (MMF) value chain in the textile industry presently faces an Inverted Duty Structure, that is the tax on output, or the final product is lower than taxes on inputs, creating an inverse accumulation of input tax credit.
- This is generally refunded by the government, creating a revenue outflow for the government, but also blocks crucial working capital flow for businesses in the meantime.
Various Initiatives Related to the Textile Sector-