Business

Report Submitted To Ministry Urges New Scheme To Set Up 1000-Acre Mega Textile Plants

A report commissioned by the Union Textile Ministry has recommended a new scheme to set up mega textile parks with a minimum land size of 1,000 acres.

The report authored by Wazir Advisors recently has mentioned that the Scheme for Integrated Textile Parks (SITP) has failed to achieve its stated objectives due to various factors like the small size of parks besides the lack of marketing support from the government. "The intended objective of SITP to foster the development of supply chain linkages and reduction in the cost of production by leveraging backward and forward integration in the value chain is yet to be realised as most of the operational parks are partially functional,” the report stated.

Other reasons for SITP’s are lack of co-ordination among the units in the park, inability to attract right investors, failure to achieve economies of scale and lack of collective approach in raw material sourcing as well as marketing, the report stated.

It has recommended that under the new scheme, 1,000-acre mega textile parks must be set up and infrastructure support must be given in the form of readymade factory sheds, warehousing facilities, incubation centres as well as testing labs with connectivity to sea ports and airports.

As per the report, agencies which would implement the new mega textile park scheme must be special purpose vehicles led by entrepreneurs, industry bodies or the respective state governments, either through their institutions or through the PPP mode. Elaborating on the reasons for SITP’s failure, the report cited high rentals in some parks, changes in other government schemes or regulations, lack of marketing efforts, no special benefits available for investors in parks, as well as poor accessibility and challenges for units in SEZs.

Parks have not yet attained their planned investment levels due to lower occupancy rates, while the current investment in 30 functional parks is around Rs 7,628 crore against their planned investment of Rs 16,628 crore, the report stated.As per the report, SITP had limited impact on bringing scale to the textile industry, since most of the parks under that scheme range from 25 acres to 27 acres.

The report has suggested that 1,000-acre mega textile parks must be established in industrial corridors or areas near seaports and for financial support to be linked to the extent of area developed, without any ceiling on financial assistance.

The manufacturing cost at SITP units was found to be only marginally higher than an industrial zone in the vicinity due to higher cost of land and maintenance inside the park, the report stated, adding that current employment level in 30 functional parks is around 68,000 people, 57 per cent of their planned employment.

There are 74 parks sanctioned under SITP till date. Out of these 30 parks are functional, while eight have applied for cancellation and others are at various stages of implementation.Parks which are still functional are involved in production of spun yarn, fabric weaving and knitting, fabric processing, garmenting, made-up manufacturing, and technical textiles, the report stated.