Gujarat’s Policy Push to Transform India's Textile Manufacturing Landscape

Gujarat, a major hub for India's textile industry, has introduced a transformative new textile policy to modernize the sector, enhance competitiveness, and foster significant employment growth. This policy provides extensive financial incentives covering various textile activities, including garments, technical textiles, and manufacturing processes such as weaving, knitting, dyeing, and spinning. The policy's comprehensive approach aims to support traditional and advanced textile segments, ensuring that Gujarat remains a global leader in textile production and innovation.

The new policy categorizes textile activities into two broad groups. The first category includes garments, apparel, made-ups, and technical textiles, which are eligible for substantial government support. The second category focuses on weaving and associated processes, such as knitting, dyeing, processing, texturizing, and twisting, with a particular emphasis on spinning man-made fibers like Polyester Staple Fiber (PSF) and Viscose Staple Fiber (VSF), while excluding spinning activities for cotton and synthetic filament yarn. By supporting these diverse activities, the policy aims to strengthen the entire textile value chain, promoting technological upgrades and innovation.

A key feature of the policy is its capital subsidy program, which provides significant financial support to textile units based on their location and activities. For units involved in garments, apparel, and technical textiles (Activity 1), the policy offers a capital subsidy of up to 35% of eligible Fixed Capital Investment (eFCI), with a maximum cap of Rs. 100 crore for units located in Category 1 Talukas and PM MITRA Parks. For Category 2 Talukas, the subsidy is 30% of eFCI, while units in Category 3 Talukas are eligible for a 20% subsidy, capped at Rs. 50 crore. For weaving and related activities (Activity 2), the capital subsidy ranges from 10% to 20%, with a cap of Rs. 50 crore for Category 1 Talukas, Rs. 40 crore for Category 3 Talukas, and corresponding amounts for other regions. This level of support is designed to encourage both the establishment of new units and the modernization of existing ones, ensuring that Gujarat's textile sector remains competitive on a global scale.

In addition to capital subsidies, the policy offers generous interest subsidies to reduce the financial burden on textile units. For Activity 1, units in PM MITRA Parks or Category 1 Talukas are eligible for a 7% interest subsidy on term loans for up to 8 years, with a cap of 3% of eFCI per annum. For units in Category 2 Talukas, the interest subsidy remains at 7% but is capped at 2.5% of eFCI per annum. Category 3 Talukas receive a 6% interest subsidy for 6 years, with a cap of 2% of eFCI. For weaving and related activities under Activity 2, the policy provides a 7% interest subsidy for 7 years in PM MITRA Parks, capped at 2% of eFCI per annum. Category 3 Talukas are eligible for a 5% interest subsidy over 5 years, with a cap of 2% of eFCI per annum. These interest subsidies make financing more affordable and accessible, especially for capital-intensive textile operations.

Recognizing the high energy consumption associated with textile manufacturing, the policy offers a power tariff subsidy of Rs. 1 per unit (kWh) for textile units availing power from either the DISCOM or renewable sources. This subsidy is available for five years from the date of commercial production, encouraging units to adopt more energy-efficient practices while reducing operational costs.

A significant component of the policy is its focus on job creation, particularly in labor-intensive sectors. For garments and apparel, the policy provides payroll assistance of Rs. 5,000 per female worker and Rs. 4,000 per male worker per month for a period of five years. In the technical textiles sector, payroll assistance is Rs. 3,000 per female worker and Rs. 2,000 per male worker per month for the same period. This payroll assistance not only reduces the financial burden on textile units but also incentivizes them to create more jobs, particularly for women, thus contributing to gender empowerment and economic inclusion.

To foster rural employment and entrepreneurship, the policy extends special assistance to Self-Help Groups (SHGs) involved in job work for the textile sector. SHGs receive Rs. 5,000 per month per member for training assistance over a period of three months, along with payroll assistance capped at Rs. 5,000 per month per member for five years. This initiative aims to boost participation from rural communities, integrating them into the broader textile ecosystem and promoting inclusive growth.

The policy also addresses the needs of labor-intensive textile units employing a minimum of 4,000 workers, of which at least 1,000 must be women. For such units, the capital subsidy for Activity 1 increases to 35% of eFCI, with a maximum cap of Rs. 150 crore. Similarly, the capital subsidy for Activity 2 rises to 25%, capped at Rs. 150 crore. These labor-intensive units are also eligible for enhanced interest subsidies, ensuring that large-scale employers receive the necessary financial support to expand and modernize their operations.

In addition to direct financial assistance, the policy includes various schemes aimed at supporting the overall textile ecosystem. These include subsidies for quality certification, assistance for energy and water conservation, and support for the acquisition of advanced technologies. By promoting sustainability and encouraging the adoption of modern technology, the policy ensures that Gujarat’s textile sector remains competitive and environmentally responsible.

Overall, the new textile policy of Gujarat is a comprehensive and forward-looking initiative that provides significant financial incentives and support to the textile sector. By targeting capital investments, energy costs, and employment, the policy is expected to drive growth in the textile industry and foster technological advancements. As Gujarat continues to lead India’s textile production, this policy could serve as a model for other states, potentially transforming India into a global textile powerhouse. The emphasis on inclusivity, sustainability, and competitiveness will undoubtedly position India’s textile industry to meet both domestic and international demands more effectively in the years to come.