INDIAN TEXTILE SECTOR AND PM MITRA SCHEME – ECONOMY
News:
Explained | Will mega
textile parks help boost the sector?
What's
in the news?
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Government announced that seven mega
textile parks under the ₹4,445-crore PM Mega Integrated Textile Regions and
Apparel (PM MITRA) scheme will be set up in the first phase.
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The notification for large-scale textile
parks under PM MITRA had been given in October 2021.
Status
of Textile Sector in India:
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From fiber, yarn, and fabric to garments,
India’s textile and apparel industry has strengths along the whole value chain.
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The traditional handloom, handicrafts,
wool, and silk items, as well as the organized textile industry in India, make
up a large portion of the widely diversified
Indian textile and apparel market.
●
The organized
textile sector in India, which encompasses spinning, weaving, processing,
and garment production, is characterized by the employment of capital-intensive
equipment for the mass production of textile items.
Textile
sector in numbers:
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2%
of Overall GDP.
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11.4% of overall export share.
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45 million direct employment.
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India is the 6th largest producer of technical textiles.
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6% Global Share, largest producer of
cotton & jute in the world.
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21% of total employment.
Significance
of the Sector:
1.
Economical: In 2019–20, the domestic textile and
apparel market was worth $150.5 billion.
2.
Trade: India registered $ 41 bn in textile exports in CY
2021, with a CAGR (2.7) marginally higher than the global average.
3.
Employment: The second-largest employer in India, the
textile and garment sector employs 100 million people in supporting sectors in
addition to 45 million workers directly.
4.
Raw material for other sectors: Technical textiles are
useful materials that are used in a variety of fields, such as automotive,
civil engineering, healthcare, agricultural, personal protection, and
construction.
Challenges
of the Textiles Sector:
1.
Highly fragmented: The Indian textile industry is highly
fragmented and is being dominated by the unorganized sector and small and
medium industries.
2.
Outdated Technology: The Indian textile industry has its
limitations of access to the latest technology (especially in small-scale
industries) and failures to meet global standards in the highly competitive
market.
3.
Tax Structure Issues: The tax structure GST (Goods and Service
Tax) makes the garments expensive and uncompetitive in domestic as well as
international markets.
4. Another threat is rising labour wages and workers salaries.
5.
Stagnant Exports: The export from the sector has been
stagnating and remained at the USD 40-billion level for the last six years.
6.
Lack of Scale: The apparel units in India have an average
size of 100 machines which is very less in comparison with Bangladesh, which
has on an average of at least 500 machines per factory.
7.
Lack of Foreign Investment: Due to challenges given above the
foreign investors are not very enthusiastic about investing in the textile
sector which is also one of the areas of concern.Though the sector has
witnessed a spurt in investment during the last five years, the industry
attracted Foreign Direct Investment (FDI) of only USD 3.41 billion from April
2000 to December 2019.
PM-
MITRA Scheme:
In this above context
India launched PM MITRA - PM Mega Integrated Textile Region and Apparel scheme
to boost the textile sector.
About
the PM- MITRA:
●
The scheme seeks to streamline the textile value chain into one ecosystem, taking in
spinning, weaving and dyeing to printing and garment manufacturing.
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It is expected to generate investments worth ₹70,000 crore. It would also lead to the
creation of 20 lakh jobs.
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Under the first phase of the PM MITRA scheme, large textile parks, spread
across at least 1,000 acres, will come up in seven states - Tamil Nadu, Karnataka, Telangana, Madhya Pradesh,
Maharashtra, Gujarat, and Uttar Pradesh housing the entire textile value chain,
from fiber to fabric to garments.
Features:
●
The parks will have plug-and-play manufacturing facilities and all the common amenities
required.
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The central government’s budget outlay for
the scheme, which is ₹4,445 crore, is to be spent till 2027-28.
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Special
purpose vehicles, with a 51% equity shareholding of the
State government and 49% of the Centre, will be formed for each park.
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The state
governments will provide the land, be part of the SPV, and give the
required clearances.
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The central government will disburse Development Capital Fund of ₹500 crore
in two tranches for each of the seven facilities. This is for the creation of
core and support infrastructure.
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It will also give a Competitive Incentive Support of ₹300 crore per park to be provided
to the manufacturing units
Uniqueness
of the scheme when compared to previous schemes:
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The PM MITRA scheme is envisaged to be a
unique initiative and the differentiating factors are the emphasis on
large-scale production and provision of plug-and-play manufacturing centers.
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The scheme is to be implemented jointly by the central and state governments.
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The parks, which will be open for foreign
direct investments, will be located in states that have inherent strengths in
the textile sector.
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Each park will have effluent treatment plants, accommodation for workers, skill training
centres and warehouses too.
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It is designed to attract investment from
companies that are looking to scale up, and require integrated manufacturing
facilities in one location.
Significance
of the scheme:
1.
Boost the export:
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Indian textile and clothing exports have
stagnated at around the $40-billion mark over the past four years, and stood at
$44 billion last year.
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The aim is to achieve $100 billion in
exports and target a domestic business of $250 billion by 2030.
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The PM MITRA parks aim to augment the
export potential of the sector.
2.
Expanding the export product basket:
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Cotton-based products make up
approximately 65% of the total textile and apparel exports.
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Indian exports, which cover a gamut of
products, are mainly known for yarn, bedsheets and towels, T-shirts and denim
fabric. Expanding the fiber and product line will give India a larger share in
the global market, from the current 5%.
3.
Cost effective and competitive:
●
In order to make a giant leap in exports
and domestic sales, the industry has to also be price competitive right from
the raw material stage and gear up to meet the sustainability and traceability
demands of international buyers.
4.
Eco-friendly value chain:
●
The State Governments and developers
should give thrust to the PM MITRA parks for sustainable and cost-effective
solutions for pollution control and other issues that the value-adding segments
of the textile chain face.
Benefit
to MSMEs:
●
MSME
Sector contributes around 80% of the textile and apparel sector.
●
Some of the MSME players who have the
appetite to invest but are in need of resources are hoping the government will
combine the Production Linked Incentive scheme II with PM MITRA, though
guidelines issued in January last year say incentives under PM MITRA will be
available only to those companies that have not availed of benefits from the
PLI scheme.
●
The Central and State governments have to
encourage MSME units to invest in the PM MITRA parks and scale up.
WAY
FORWARD:
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The Textile sector has great potential and
it should be realised by using innovations,
latest technology and facilitations.
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India can make the sector organised by setting up mega apparel parks and common
infrastructure for the textile industry. Focus should be on the
modernisation of obsolete machinery and technology.
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India needs a comprehensive blueprint for
the textile sector. Once that is drawn up, the country needs to move into
mission mode to achieve.