The proposed textile park by the Punjab Government in the cotton growing belt of the state might face hiccups as textile players across India are having a tight rope walk due to low sentiments, and do not plan to park in funds in the new ventures.
With the cotton prices going haywire, over-production and low offtake of yarn, thread and garments in the past few months have put the textile sector in disarray.
Talking to Business Standard, the chairman of Oswal Group, S P Oswal said that the incentives and concessions offered by the state government actually help to mobilise the investment in a particular location. The proposal for textile park in the cotton growing belt of the state in the districts of Bhatinda, Mansa, Faridkot, Ferozpore, Mukatsar, Sangrur and Barnala, may help the industry in backward integration and cutting the cost of transportation of raw material (cotton).
At present, the entire value chain is saddled with the problem of over-production. The units are already operating at low capacities as there is uncertainty and a huge unsold stock. So it may take a while for any concrete result.
The Chief Secretary of Punjab, S C Aggarwal said, “The state government has identified land in consultation with the farmers in that pocket. The state does not have a comprehensive ‘relief and rehabilitation policy’ as the farmers in Punjab have negotiating skills for their land and are quite capable of rehabilitating themselves. The land deals would be done directly between the private players and the farmers and the state would not be a part of it.”
The state government last week announced a comprehensive package of incentives for attracting world class textile parks in the Malwa region.
The main component of the package was 50 per cent exemption from market fee, RDF (rural development fund) and ID cess for 10 years on purchase of cotton.
Other concessions offered include 10 per cent of the total land acquired/purchased by the investor, would be allowed for commercial use without change of land use and external development charges.
The state government has also proposed to facilitate power at the doorstep and availability of canal water for captive power generation.
It can be a single park or multiple parks scattered over various locations. The private entrepreneurs can make a consortium to develop the park.
The minimum investment to seek benefits would be Rs 250 crore (required for setting up 60,000 spindles for a spinning unit). The players with lesser funds can also set their foot, but would not be entitled to concessions, said Aggarwal.
Punjab has a cluster of spinning units at Lalru (30 km from Chandigarh) and spinning, garmenting and hosiery cluster at Ludhiana. These two are far from the cotton belt. The proposed project, if implemented, may help the entire value chain and benefit the development of the belt that has been industrially backward.
