Policy measures for the growth of
Textile Industry in Gujarat

Indian Textile industry is one of the fastest growing segments, in terms of both new investment and employment generation, aiming for domestic as well as international market. India’s recent economic growth and the huge domestic market has further prompted several international companies to explore establishing manufacturing base in textile and clothing and retail in the country. In order to achieve a competitive advantage and to access the international market, many Indian textile giants are also looking for consolidation, amalgamation or acquisition outside the country.
The major factors responsible for growth in this sector are -

To enter a more liberalised economy, a series of Preferential Trade Agreements have been signed with countries such as Sri Lanka, Singapore, South Africa, Bangladesh, Thailand and China in the recent past and many others are on the cards. This will give a further boost to the Indian Textile Industry.

In Gujarat, there is significant economic importance of this industry in the whole value chain – from farm to fabric to garments; with innovative ideas and diversified products.  Gujarat, being the largest producer of Cotton in the country  (35%), is also having the largest Manmade Filament Yarn base at Surat.  40% of art-silk fabric produced in the country is from Surat alone. Surat has now become the hub of Machine Embroidery activity in the country. About 7000 modern imported machinery has been installed in the last 3 years. Gujarat accounts for over 12% of India’s textile exports, mainly in the areas of fabric and made ups.  About 25% of fixed investment, value of production and employment in the SSI sector of the state is in textiles. 35% of fabric from the organised sector and over 25% from the power loom sector of country is produced in Gujarat. Historically, too, Gujarat has been the leading textile producing state of the country.

The Government of Gujarat has also set up Development Council on Textiles to look into the progress of the sector in the state. In an important initiative by the state government, the Gujarat Industrial Development Corporation (GIDC), has set up two Apparel Parks, both as Special Economic Zones (SEZ), in Surat and Ahmedabad, besides the ongoing development of an exclusive textile park at Ichhapur (Surat). In Ahmedabad Apparel Park, this has been done on the land of closed textile mills, which is a sure beginning in reviving the textile sector of Ahmedabad city. Government of India has also sanctioned 6 Textile Parks in Gujarat under the Scheme for Integrated Textile Parks (SITP) in Surat, Ahmedabad and Kutch districts.

Looking to the huge potential of Technical and Industrial Textile, Government of Gujarat has set up a Working Group on Technical Textile
to prepare an Action Plan to promote this sector in the state.  Various opportunities in this sector have already been identified. Based on the recommendation made by the Working Group on Technical Textiles, the state is also considering setting up a Centre of Excellence for Technical Textile, both at Surat and Ahmedabad, and has already extended financial support for setting up new units in this field.

Under the Gujarat Industrial Policy 2003, the state government has announced and implemented many schemes for assisting the entrepreneurs, such as interest subsidy @ 5% p.a. to new SMEs for 5 years, interest subsidy @ 3% p.a. for 5 years to existing units for technology upgradation, financial assistance up to Rs.2 crore for setting up Apparel Training Centres and financial assistance up to Rs.2.5 crore for setting up Industrial Parks.

In addition to the Technology Mission Scheme of the Government of India, the state government has extended support to Ginning & Pressing industry under its Cluster Development and R&D Development Programme on the one hand and indigenous low cost Rapier Loom Development for decentralized Powerloom sector on the other.

With the on-going development of the textile environment and related sectors, environment issues have become a major concern for the state administration. Therefore, Common Effluent Treatment Plants (CEPT) for Textile Processing are being assisted in different places in the state. In addition to 25% capital subsidy provided to such projects by the Ministry of Environment & Forest, Government of India, the state government also extends 25% capital subsidy for setting up CEPT in Gujarat. 

Looking to the future demand of skilled manpower, the state has evolved a special scheme to set up Apparel Training Institutes, both in private and government sectors, besides providing training for powerlooms and garment sector through ATIRA, MANTRA and NIFT.   Recently, the state government has come out with a policy on Contract Farming and Corporate Farming separately, which is expected to give further boost to cotton cultivation; thereby, promoting export of cotton from the state. Gujarat, the largest producer of cotton in the country is, in any case, exporting cotton to countries like Bangladesh, Indonesia and now to China.

Textile Sector, in specific cotton spinning, is energy intensive.  However, the state government has exempted new units from payment of electricity duty for 5 years. This results in a 15% reduction in energy bill.  Textile industry in Gujarat is encouraged to go in for captive power plant based on lignite, imported coal or natural gas to become more cost competitive.

Gujarat has global strength in the production of cotton, made-ups and denim.  Ahmedabad is known as the Denim City of India.  Over 65% of the denim fabric produced in the country is from Gujarat. But major denim producers in the state are much influenced by the ups and downs of the international market.  Development of medium and large-scale sector in garments has not been impressive as yet, both in the state and in the country, which otherwise would be the major consumer of denim fabric.  However, after the de-reservation of garment sector, most of the leading textile players are extending their activities in to garment.  International garment buyers, manufacturers and retailers are in the process of setting up their establishment in Gujarat. 

Textile Industry in India and, in specific, in the state of Gujarat, is undergoing a transition phase.  Major textile exports from the country are in Apparel (50%), Fabrics (18%), Yarn (14%) and Made ups (12%); whereas Gujarat is having a strong base in fabrics and made-ups only.  Now, the state is looking at export of cotton too. In the current year, Gujarat has exported 25 lakh bales, which is 50% of the total cotton export from the country. In 2006, the state has produced over 100 lakh bales of cotton, which is an all time record. 

Though the state is strong in man-made filament yarn and fabric production, this sector is yet to establish a notable position in the international market.  Many of the units are already diverting their product-mix towards fabric for specialised garments or fabric for specialised industrial use.  Leading Textile players  in Gujarat, are either in the process of Expansion creating both forward and backward linkages or going for new  product and technology, as a part of diversification. Notable names in this process are Raymond, Chiripal, Ginni Filament, Grashim, Gujarat Ambuja exports, Mafatlal, Century, S Kumars and many others mainly in the area of Synthetic fibre, Fabric, Made-up, Apparel and Technical Textile. Overall, an inefficient capacity in textile is giving way to an efficient one, with a move towards consolidation that is depending more on technology, innovation, and adaptability and prompt service

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