Budget 2021: Textile parks may attract big investments from players

Up to Rs 5,000 crore likely as big brands look to scale up manufacturing in the country

Large apparel manufacturers may consider investing in the seven textile parks proposed in the Union Budget on Monday. The Finance Minister Nirmala Sitharaman had said that textiles were a champion sector under its Make in India programme.

The parks, to be set up over 1,000 acres of land in three years, will be in addition to the Rs 10,683-crore production linked incentive (PLI) scheme for technical textiles and manmade fibre announced earlier.

Industry experts and executives that Business Standard spoke to said that up to Rs 5,000 crore could be pumped in by large garment manufacturers and exporters, keen to take advantage of the tax sops and benefits that the parks will provide.

The buzz is that players such as Arvind, Aditya Birla Fashion, Future Enterprises and exporters such as Gokaldas Exports could consider investing in the proposed mega parks, which will have world-class infrastructure, uninterrupted water and power supply among other facilities.

 

Such parks exist in countries such as China and Vietnam, where the entire textile value chain is covered under one roof.       

"These parks could encourage the scale of production that the domestic industry lacks," Rahul Mehta, director, Creative group, a Mumbai-based garment manufacturer, said. Mehta is also the past president of the Clothing Manufacturers Association of India (CMAI), which has made representations to the government from time to time to introduce global standards in the domestic textile industry.

While India exports around $16 billion worth of textiles annually, the market has remained largely stagnant as countries such as Bangladesh and Vietnam intensify competition. Though foreign apparel brands such as Zara, H&M, Marks & Spencer and Uniqlo have launched in India over the last few years, many continue to import apparels from Bangladesh and sell them in India as part of a free-trade agreement between the two nations.

A Sakthivel, chairman, Apparel Export Promotion Council, said that he expected foreign direct investment into the parks as international brands look at India as an export hub in the future.

 

Raja Shanmugham, president, Tiruppur Exports Association, said that the mega parks would help the textile industry to become globally competitive. "Foreign companies, large local players including some cash-rich medium-size units could set up their units within the parks," he said.

Some experts, however, argue that the concept of textile parks is not new in India. Over 50 such parks were sanctioned under the earlier Scheme for Integrated Textile Parks (SITP), which was launched 15 years ago. But administrative delays have ensured that the scheme has remained mostly on paper.

The Modi government hopes to change all of that with the new mega parks.