Surat textiles units may shift base

Cheaper power in Maharashtra, daman key temptation for industry

The high power tariff is the biggest reason for the slump in Surat's textile industry.

"The power tariff in Surat is probably the highest in the country. While units in Maharashtra are supplied power at the rate of Re 1 per unit, those in Surat are charged Rs 4.50 to Rs 5. This huge difference in the power tariff results in a much higher production cost of textiles," the Southern Gujarat Chamber of Commerce & Industry president Dinesh Mandalaywala said.

The industry, with approximately six lakh powerlooms, 40000 wholesale textile shops and 400 powerloom units, has been facing tough times of late. Every other day, there are reports of some textile unit closing down.

The problem is so acute that several units owners have threatened to exit Surat, and even Gujarat.

"The Maharashtra government is offering cheaper power and other incentives to attract the textile industry of Surat. The power tariff in Silvassa and Daman is also Rs 2.50 per unit, i.e. almost half of the tariff in Surat. One also gets the benefit of various tax exemptions if the industries are setup in the union territories," said a leading Surat based textile weaver, requesting anonymity.

"The industry has so far resisted the temptation to shift base, but the situation could change very quickly. If the government does not change its view "" and that too quickly "" several textile industries could shift outside Surat and Gujarat," he added.

"This is certainly not what the state government wants, as it would also mean a huge dent in its revenue. In the interest of the textile industry, as well as its own, the government should reduce the power tariff at the earliest," the weaver said.

"The high production cost reduces the competitiveness of the textiles manufactured in Surat, in the domestic as well as the international market," Mandalaywala said. Power cost amounts to around 35 per cent of the total production cost of textiles.

"The textile industry is the backbone of Surat's economy. It provides employment to over seven to eight lakh people, and contributes hundreds of crores to the government exchequer each year by way of various taxes," he said.

"The government should realise the importance of the textile industry and substantially reduce the power tariff to help it survive," he added.

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Weft of woes

• Power tariff is Rs 1 per unit in Maharashtra, Rs 2.5 per unit in Daman, and Rs 5 for textile units in Surat
• Industries set up in Union territories like Daman also get tax exemptions
• There are about six lakh powerlooms, 40000 wholesale textile shops and 400 powerloom units in Surat