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PM MITRA Parks: Propelling India’s Textile Sector To Global Prominence – IMPRI Impact And Policy Research Institute

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PM MITRA Parks: Propelling India’s Textile Sector to Global Prominence

Policy Update
Yashica

Background 

The government of India announced a major policy update for one of the prime industries of India, the textile industry. This scheme, referred to as the PM MITRA Scheme aims to foster technological innovation, reduce cost enhance skills in the sector, make India’s textile sector globally competitive, and increase its contribution to the global trade from the present 4% rate. 

Textile being one of the major employment-generating industries, makes up 2% of India’s GDP, as of 2023. This industry generates a substantial number of employment opportunities for both skilled and unskilled laborers, especially women. With 60-70% of women comprising the textile sector, it provides income to more than 27 million women. The textile industry is more prominent in rural areas with about 50% of the workforce engaged in unorganized sectors including handicrafts, handloom, and sericulture.

However, the Indian textile industry is confronted with a lot of challenges in contemporary times. These include an increasingly unorganized sector, fragmented industry, outdated machinery, inadequate infrastructure, low investment as well a low level of ready-made garments (RPG) exports globally. The PM Mega Integrated Textile Regions and Apparel (PM MITRA) Parks Scheme aims to address the above challenges.

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Functioning of PM MITRA

Based on the Prime Minister’s 5F vision of Farm to Fibre to Factory to Fashion to Foreign, the PM Mega Integrated Textile Regions and Apparel (PM MITRA) Parks enable the creation of a large-scale, one-location, modern, and integrated textile value chain to strengthen the global importance of India’s textile industry.

As per the scheme, 7 textile parks will be set up at different locations, in the states of Tamil Nadu, Telangana, Gujarat, Karnataka, Madhya Pradesh, Uttar Pradesh, and Maharashtra. These 7 sites were chosen based on factors such as connectivity, the existing ecosystem, textile and industry policies, infrastructure, utility services, and validation through PM Gati Shakti – National Master Plan for Multi-modal Connectivity. These chosen parks are anticipated to draw investments totaling Rs. 70,000 crores and create employment opportunities for approximately 20 lakh individuals.

Under the supervision of the Ministry of Textiles, each park will have its Special Purpose Vehicle (SPV) managed by both central and respective state governments in a Public Private Partnership (PPP) structure. Each park is designed to include an incubation center, a common processing house, a shared effluent treatment plant, and other textile-related facilities like design and testing centers.

The Master Developer is not only responsible for the initial development of the industrial park but will also ensure its maintenance throughout the concession period. The scheme’s objective is aligned with the United Nations Sustainable Development Goal 9, which focuses on building resilient infrastructure, promoting sustainable industrialization, and fostering innovation in India. The aspiration is for the PM MITRA Parks to feature world-class industrial infrastructure, attracting state-of-the-art technology, and catalyzing both foreign direct investment (FDI) and local investments in the textile sector.

The provisions of the scheme not only focus on infrastructural development and enhancing the textile ecosystem but also aim to create 1 lakh jobs directly and 2 lakh jobs indirectly. As per estimations, each PM MITRA Park will attract a 10,000 crore investment. With plug and play infrastructure, skilled workforce, the MITRA scheme hopes to attract large investments and boost employment generation.

Features

A minimum estimated area of 1,000 acres per park will allow large units, both domestic and international to be located in MITRA Parks. The plug-and-play infrastructure and an integrated textile value chain including spinning, weaving, processing, and printing to garment manufacturing, and accessories at one location promises to cut time and monetary costs. Other significant components include Manmade Fibre (MMF) and Technical Textiles.

Greenfield Sites (newly independent sites) or brownfields (sites with partly developed industrial trunk infrastructure and other intended facilities) can be taken up as sites for the PM MITRA parks. The Textile Ministry has announced that for the development of a new PM-MITRA park, the Government of India will provide capital support amounting to 30% of the project cost, with a maximum cap of Rs 500 crore.

In the case of existing brownfield sites, the support for development capital will be determined after evaluation and limited to 30% of the project cost for additional infrastructure and related facilities, with a maximum limit of Rs 200 crore. Furthermore, state government assistance will involve allocating 1,000 acres of land for the establishment of a high-quality industrial estate.

The parks will additionally house training and research facilities for the industry. According to the government, this initiative under the vision of ‘Atmanirbhar Bharat’ will also attract large-scale investment including foreign direct investment (FDI), and encourage innovation and job creation within the sector.

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Funding and Governance 

Funding for the parks will be a joint venture by the state and the central government. The greenfield projects will receive up to Rs. 800 crores per park and the brownfield projects will receive up to Rs. 500 crores per park from the Ministry of Textiles. This joint funding aims to reduce high logistical costs and strengthen the value chain of the textile sector.

Registered under the Companies Act 2013, the Special Purpose Vehicle (SPV) leading each MITRA park will be a joint venture. The government of India will pay for 49% equity along with providing financial support in the form of Development Capital Support, a Competitiveness Incentive Support (CIS) up to Rs 300 crore per park on a first come first serve basis as well as additional incentives by converging this scheme with the existing ones. Moreover, investors establishing “anchor plants” with a workforce of at least 100 individuals will qualify for incentives, receiving up to Rs 10 crore annually for a maximum period of three years.

On the other hand, the State Government will pay for 51% of the capital. The State Government will additionally be responsible for providing land and augmented utility infrastructure including reliable power supply and water availability and wastewater disposal system, an effective single window clearance as well as a conducive and stable industrial/textile policy, for the proposed mega textile parks. 

The governance of the scheme will be primarily managed by the Ministry of Textiles. The Chairperson of the Board of Directors will be the Secretary of Textiles, Government of India. Headed by the Secretary, an inter-departmental Project Approval Committee (PAC) will oversee the operationalization of units in MITRA Park. The Master Developer, appointed by SPV will be responsible for designing and master planning, building, financing, operating, and maintaining the MITRA Park. He will also be responsible for the operation and maintenance of MITRA Park as per the minimum prescribed standard during the concession period.

Way Forward 

As per the Union Minister of State for Textiles, Smt. Darshana Jardosh, SPV has been formed in the states of Uttar Pradesh and Gujarat, while Madhya Pradesh and Tamil Nadu are at an advanced stage of incorporation. 

The textile industry plays a significant role in India’s culture and economy. However, fragmentation, and lack of jobs, are some of the loopholes within the industry. This scheme aims to promote inclusive development, integration of the industry, low-cost investments, and global competitiveness in the textile sector. Red tape, environmental violations, diversion of funds, and temporary employment are some of the issues that authorities will have to keep a check on, to implement the policy effectively. Regular monitoring and evaluations of the scheme can help mitigate potential loopholes and ensure its success in promoting economic development.

References

  1. “About PM MITRA PARK SCHEME 1. BACKGROUND • The Indian textile industry is one of the largest in the world with a large raw mat.” n.d. Ministry of Textiles. Accessed January 31, 2024.
    https://www.texmin.nic.in/sites/default/files/mitra_0.pdf.
  2. A. M. Jigeesh. 2023. “Master developer for PM Mitra parks to be selected in three months: Union Textiles Secretary.” The Hindu, April 13, 2023. https://www.thehindu.com/news/national/master-developer-for-pm-mitra-parks-to-be-selected-in-three-months-union-textiles-secretary/article66729771.ece.
  3. Business Standard. 2021. “Govt notifies setting up of 7 mega textile parks under PM-MITRA scheme.” October 22, 2021.
    https://www.business-standard.com/article/economy-policy/govt-notifies-setting-up-of-7-mega-textile-parks-under-pm-mitra-scheme-121102201268_1.html.
  4. The Economic Times. 2022. “PM MITRA: Government releases 5 metrics to decide sites.” January 18, 2022.
    https://economictimes.indiatimes.com/industry/cons-products/garments-/-textiles/pm-mitra-government-releases-5-metrics-to-decide-sites/articleshow/88981526.cms?from=mdr.
  5. “Is the Indian textile industry ready for a global footprint?” 2021. The Textile Magazine. https://www.indiantextilemagazine.in/is-the-indian-textile-industry-ready-for-a-global-footprint/.
  6. Jhunjhunwala, Riju. 2022. “Textile industry supporting Indian employment.” Times of India, August 30, 2022.
    https://timesofindia.indiatimes.com/blogs/voices/textile-industry-supporting-indian-employment/.
  7. Mandal, Yuvaraj. 2023. “PM Mitra, PLI And FTAs: Saviour For Ailing Indian Textile Industry? – IMPRI Impact And Policy Research Institute.” https://www.impriindia.com/insights/policy-update/pm-mitra-pli-ftas/.
  8. “PM Mega Integrated Textile Region and Apparel (PM MITRA).” 2022. National Portal of India.
    https://www.india.gov.in/spotlight/pm-mega-integrated-textile-region-and-apparel-pm-mitra.
  9. “Seven PM MITRA (Pradhan Mantri Mega Integrated Textile Region and Apparel) Park sites announced.” 2023. PIB.
    https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1908052.
  10. “Under PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks, 18 proposals from 13 states received.” 2023. PIB. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1988725.

Yashica is a Research Intern at IMPRI and currently pursuing B.A. Political Science Honours from Sri Venkateswara College, University of Delhi.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.

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Acknowledgment: This article was posted by Aasthaba Jadeja, a research intern at IMPRI.

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