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Why in news?

On October 6, 2021, the Union Cabinet approved the establishment of seven Mega Integrated Textile Region and Apparel (PM-MITRA) Parks with a total investment of Rs. 4,445 crores over five years. The parks will help India get a solid foothold in the global textiles market.

Present Context:

• In the Union Budget for 2021-22, PM-MITRA Parks was announced. According to the official announcement, state governments with ready access to contiguous and encumbrance-free land parcels of 1,000 acres or more, as well as other textiles-related facilities ecosystems, are encouraged to submit applications.
• While speaking about the decision made at the Union Cabinet meeting, Union Textiles Minister Piyush Goyal stated that ten states have already expressed interest in establishing giant textile parks.

About PM MITRA Yojana:

• PM-MITRA Parks will be established on greenfield/brownfield lands in a variety of willing states.
• A Challenge Method will be used to choose the park’s locations based on objective criteria.
• For the development of common infrastructure, a maximum Development Capital Support of Rs. 500 crores will be allocated to all Greenfield parks and a maximum of Rs. 200 crores to brownfield parks.
• Each park will receive 300 crores in Competitiveness Incentive Support (CIS) for the early creation of a textile manufacturing unit.
• 50 percent of the area will be developed for pure manufacturing activity, 20% for utilities, and 10% for commercial development under the PM-MITRA Yojana.
• Convergence with other federal and state government programs will be possible. It will boost the textile industry’s competitiveness.

Significance of PM MITRA Park:

• PM-MITRA Parks will employ a total of 7 lakh people directly and another 14 lakh indirectly.
• The giant textile parks will allow for the creation of an integrated textile value chain in one location, including weaving, spinning, printing, processing/dyeing, and garment production.
• Having an integrated textile value chain in one location across the country will also help to reduce the industry’s logistics costs.

PM-MITRA Parks are being developed in India:

• According to the official announcement, the seven PM-MITRA parks will be constructed by a Special Purpose Vehicle (SPV) that will be jointly owned by the State and the Federal Government in a public-private collaboration.
• Master Developer will not only create the Industrial Park, but will also maintain it during the concession time, according to the statement. The Master Developer will be chosen based on objective criteria developed in collaboration with the state and federal governments.
• The State Government will possess a majority of the Special Purpose Vehicle, which will be entitled to a portion of the lease rental from developed industrial lands. SPV will be able to use this money to boost the textile sector by developing PM-MITRA Park, launching skill development programs, and other initiatives.

Challenges associated with Textile Industry:

• The Indian textile industry is highly fragmented, with the unorganized sector and small and medium-sized businesses dominating.
• Outdated technology: In a highly competitive market, the Indian textile sector faces challenges such as access to cutting-edge technology (particularly in small-scale enterprises) and failure to satisfy global standards.
• Inflexible labor laws: India’s labor policies are quite complicated. There are about 200 labor laws in the country, with a fourth of them being Central Acts. Several labor rules, such as the Industrial Disputes Act of 1947, limit the scale of manufacturing companies and prevent them from expanding.
• Issues with the tax structure: The GST (Goods and Service Tax) structure makes clothing expensive and uncompetitive in both domestic and foreign markets. Another danger is the rise in labor wages and salaries.
• Lack of foreign investment: Due to the aforementioned issues, international investors are hesitant to invest in the textile industry, which is also one of the areas of worry. Despite an increase in investment over the last five years, the industry only received US$ 3.41 billion in foreign direct investment (FDI) from April 2000 to December 2019.
• Stagnant exports: For the past six years, the sector’s exports have remained unchanged, hovering about $40 billion.
• Inadequate scale: The average size of an apparel unit in India is 100 machines, which is quite little in comparison to Bangladesh, which has at least 500 machines per plant.

Enhancing India’s Competitiveness Strategy:

• Exploring undiscovered markets in the global textile and apparel industry: India’s total T&A exports for most of the key markets are less than 3% of its overall T&A exports. These markets provide our exporters with a fantastic potential to boost India’s T&A exports. Indian manufacturers and exporters may differentiate themselves in these areas by focusing on production excellence.
• Product portfolio diversification: India’s exports are not very well aligned with global demand. By investing in various goods, the Indian textile sector may better grasp and capitalize on this potential market opportunity. Keeping up with buyer demands in export markets and being responsive to them might help exporters compete more effectively.
• Improving service and quality: This is one of the most pressing concerns confronting Indian exporters.
• Quality and quantity issues to be addressed:
  • Deployment of faulty goods
  • Product packaging is inadequate.
  • Inability to accommodate huge orders
  • Non-compliance with rules and regulations.
• Problems with service levels include:
  • Lengthy lead times
  • Merchandisers and buyers don’t communicate well.
  • Shipment delays due to infrastructural and procedural issues.
• Job creation through local market expansion: By 2025, the Indian textile and apparel sector might rise by 11%, reaching US$ 290 billion. Exploring more sectors of the home market becomes more important as the industry grows. In the home market, a great number of prospective product categories have formed.

Surat-largest textile markets:

• Surat, the largest textile market in South Gujarat, is the main hub of economic activity in the region.
• Traditional businesses such as Jari, Art Silk, diamond cutting and polishing, textiles manufacture, dyeing and printing industries, and so on are still operational in Surat and play an important role in the city’s economy.
• Surat has grown as an industrial town mainly engaged in power looms, weaving, printing and dyeing of textiles, cutting and polishing of diamonds, manufacture of silver and gold brocade; and manufacture of plastics. In the last two decades, especially during the eighties large-scale industries have come up in Surat and its peripheries.

What more can be done to enhance the textile Industry?

• Facilitate industry modernization: Emphasis should be placed on the replacement of outmoded machinery and technologies. This can aid in increasing the textile industry’s production and productivity, as well as its exports. National Technical Textiles Mission (NTTM), Amended Technology Up-gradation Fund Scheme (ATUFS), and Integrated Wool Development Programme (IWDP) programs should be implemented as efficiently as possible.
• Towards an organized sector: India can organize the textile industry by establishing mega apparel parks and common infrastructure. This will enhance the size of production and enable Indian players to produce more quickly and at a cheaper cost while maintaining optimal operational efficiency.
• Attracting Foreign Direct Investment (FDI): The Indian government has devised a number of export promotion programs for the textile industry. For example, under the automatic method, India has approved 100 percent FDI in the Indian textiles sector. To make it easier for foreign investors to do business, single-window clearances and a variety of resolution procedures should be available.
• Increased exports: To expand its export potential, India must strike trade agreements with wealthy countries. These Free Trade Agreements (FTAs) can assist textile manufacturers acquire duty-free access to large markets including the EU, Australia, and the United Kingdom.
• Rational labor laws are required: Several high-level expert panels have advised removing restrictions on firm size and allowing more flexibility in hiring and dismissing. As a result, early rationalization of such labor legislation is required.

Conclusion:

For the textile industry in India, a thorough plan is required. Once that is completed, the country must shift into mission mode in order to achieve it. In this context, the Centre’s new Textiles Policy 2020 should aim to create a competitive textile sector that is contemporary, sustainable, and inclusive.

Mains oriented question:

Textiles that are competitive are modern, sustainable, and inclusive.” Discuss the obstacles to developing a competitive textile sector in India and the steps that should be taken to overcome them. (200 words)