To attract higher foreign investment in the textile sector, India has planned a complete overhaul of a scheme to create world-class infrastructure facilities for setting up textile units. The government is considering a plan to set up 1,000-acre mega textile parks as it revamps the Scheme for Integrated Textile Park (SITP) whose slow progress is attributed to delay in obtaining land and other statutory clearances from State Governments and slow fund mobilisation by the textile parks.
Launched in 2005, the scheme aims to provide industry with state of the art world-class infrastructure facilities for setting up their textile units. A total of 59 textile parks have been sanctioned under SITP by the Textiles Ministry out of which 22 textile parks have been completed and rest are under various stages of construction Textiles Ministry has circulated a cabinet note, a Senior Government official told.
As per another official, the overhauled scheme could be part of the proposed textile policy for which many detailed studies are going on. “The idea to make mega textile parks is to attract FDI,” said another official. From April 2000 to September 2019, India’s textiles sector received rs. 19,398.71 cr or $3.3 bn of FDI which is 0.74 percent of the total inflows.
Under the SITP, infrastructure facilities for setting up of textile units are developed in a Public-Private-Partnership (PPP) model, with the government granting upto 40 percent of project cost with ceiling limit of rs. 40 cr for each park.
An expert committee on textiles had in 2015 suggested the idea of mega textile parks and proposed the Ministry to partner with states to set these up so as to be able to absorb about $5 bn per year of fresh investment. It recommended that Mega Textile Parks should be developed especially in the planned Industrial Corridors and be provided cheaper and reliable power supply. Textile manufacturers and exporters concurred that the extant textile park scheme is not successful.
“The government is not happy with the existing scheme and the size of the parks now which can be anything above 20 acres. These are smaller parks and they also have not taken off very well,” said a Delhi-based manufacturer of textiles and apparel.
As per the manufacturer, there is empty space in the parks and a lack of investment climate has hindered the scheme’s progress. Experts said the government may also revamp the Technology Upgradation Fund Scheme (ATUFS) which is used to promote technical textiles and generate employment in the apparel and garment sectors.