India’s Ambitious ‘Mega Parks’ Textile Scheme Begins to Take Shape

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It costs nothing to dream. But with an investment of more than 44.5 billion rupees ($542 million) by the central government in India, the dream is now fast on its way to reality.

The goal: to put the local textile and apparel industry on fast forward by creating large scale textile and apparel parks in hubs across the country.

Making a concrete step toward this vision is the PM Mitra scheme, short for Pradhan Mantri Mega Integrated Textile Region and Apparel scheme, which reflects the ‘5F’ vision of prime minister, Narendra Modi: “Farm to Fiber to Factory to Fashion to Foreign.”

Modi has repeatedly said that these textile parks will provide “state-of-the-art infrastructure for the textiles sector, attract investment and create jobs, and are a great example of ‘Make in India’ and ‘Make For the World.'”

The choice of the seven states for placement was revealed on March 17, after a year of hard reconnaissance and tough choices between 18 applications from 13 states.

The winners: Tamil Nadu, Karnataka, Telangana, Madhya Pradesh, Gujarat, Uttar Pradesh and Maharashtra.

These regions already have inherent strengths in the textile sector, and analysts are now looking to see how open they will be for foreign direct investments to create an integrated textiles value chain, from spinning, weaving, processing/dyeing and printing to garment manufacturing at a single location.

“Nothing like this has been done before,” Chandrima Chatterjee, Secretary General, Confederation of Indian Textile Industry (CITI) told Sourcing Journal. “Two things differentiate the PM Mitra scheme from earlier initiatives. The first is the scale—it is much bigger—with 1,000 acres minimum in seven states. The second is that it includes a model of a complete ecosystem, from yarn to fabric, to garmenting as well as the advantages of common effluent plants, etc.”

These parks are expected to attract a total investment of approximately 700,000 million rupees ($852 million) including the expected outlays from the states and the private sector, generating two million jobs.

The next step is already underway: the signing of a memorandum of understanding with each state—a high-level affair in which the chief minister of the state and a top central government representative are present. The first two have been kicked off in Karnataka, which is already a favored manufacturing destination, including around Bengaluru the capital of the state; and the second in Tamil Nadu, which is well known for its Tirupur area, a major manufacturing region for knitwear exports, as well as around its capital, Chennai.

Karnataka chief minister, Basavaraj Bommai launched the Kalaburagi Mega Textile Park under the scheme last week, to be set up on 1,550 acres of land, at a cost of 18,340 million rupees ($223.4 million), with approximately nine private companies already signed up.

Prime Minister Modi noted the event in a tweet, and observed: “Indeed a special day for Karnataka and particularly Kalaburagi. Through this textiles park, the world will get a glimpse of India’s textiles diversity and the creativity of our people.”

The Tamil Nadu government signed the memorandum of understanding with the central government for a 1,052 acre site, in Virudhunagar district with an expected investment of more than 100 billion rupees ($1.21 billion).

“It will generate employment opportunities for 200,000 youngsters when the park is fully operational,” said Tamil Nadu chief minister M K Stalin on the occasion, adding that the state already accounts for one-third of the country’s handloom production.

A government official who asked not to be named said that perhaps one of the big outcomes of this selection would now be the competition between the states—adding that the industry was watching keenly. The politics of the state-central government dialogues on the issue, as well as state policies for investment and speedy paperwork, would be key going forward, he said.

For example, upcoming elections in the state of Karnataka which will go to the polls on May 10, may sway the speed and course of the project.

“We understand today that time is of the essence,” CITI’s Chandrima Chatterjee observed.

“For time to be critically leveraged, we have to be collaborative and start manufacturing as soon as possible. There is a lot of work ahead, choosing the developers, planning the systems. The industry is watching keenly which state will start rolling out first, because they will get first movers’ advantage,” he noted.

In some states, like Telangana, for instance, the Kakatiya Mega Textile Park (KMTP) at Warangal has already been seeing infrastructure development. The foundation stone for this park was laid in October 2017. A large part of its land has already been taken up by companies in the process of setting up their plants there including Kerala-based Kitex garments, one of the world’s largest kids apparel manufacturers and South Korea’s YoungOne Corporation.

Mihir Parekh, director of textiles and apparel for the government ofTelangana added perspective.

“What the government is saying to international investors is that ‘we have ticked all the boxes,’ for statuary approvals, etc., we have put in a package, within which you have seven options, which really should give a lot of confidence,” he said.

Parekh elucidated the point further: “Global companies should know (that they are) coming into a park that is 1,000 acres right in the middle of the ecosystem. Each will have a common effluent plant, so the burden of treating effluent goes away, and all these will be set up with the most modern technologies so that they are compliant with requirements of international buyers so they don’t have to deal with pollution requirements of different states. The companies at the park will have en masse environmental clearance, which will save approximately 9-12 months, because they don’t need to get separate environmental clearances.”

“They just need permission to manufacture, which in Telangana is within a two-three week window,” he said.

Industry analysts said that the PM Mitra scheme should also be looked at in conjunction with another major initiative, the Production-Linked Incentive (PLI) scheme for textiles. The government already approved a financial outlay of 106.83 billion rupees ($1.3 billion) over a five-year period, starting in 2021. A total of 61 applicants were approved, with a proposed total investment expected from applicants of 190.77 billion rupees ($2.32 billion).

The scheme focuses on manmade fiber (MMF) apparel, MMF fabrics, and products of technical textiles to enhance India’s manufacturing capabilities and exports.

Will it complete the dream, even as industry leaders wring their hands at the fact that Indian textile and apparel exports have been staying close to the $40-billion mark, despite being a country that has so much vertical integration?

Naren Goenka, chairman of the Apparel Exports Promotion Council (AEPC), is clear: “PM Mitra will reestablish India’s dominance as a global textiles leader. I am sure that these mega textiles parks with world-class facilities and integrated value chain will create global champions by enhancing apparel exports exponentially and creating massive employment opportunities to the tune of 2 million,” he said.