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Concerns remain over new Maharashtra textile policy
Jan '12
The new textile policy approved by the Maharashtra State Cabinet last month has given rise to several concerns among textile entrepreneurs, especially those belonging to the interior Vidarbha region of the State.

The draft policy envisages interest subsidy of 12.5 percent and capital subsidy of 10 percent for cooperative and private textile units in the cotton growing regions of the State. For non-cotton growing regions, the interest subsidy would be 10.5 percent, of which a share of 5 percent would be contributed by the Central Government.

Through the new policy, the State government aims to attract Rs. 400 billion in investments in the textile sector and generate 1.1 million jobs.

Mr. Praveen Rander, Director, Shri Bhagirath Textiles Ltd., which has a well-established cotton trading activity at Nagpur, told fibre2fashion, “The new policy seems to be beneficial and it is expected to fetch a lot of fresh investment in the State's textile sector.”

“Since the past one year, it has been extremely tough for the spinning industry in Maharashtra, as the power costs are highest in India, and the labour costs are ever increasing. So, with the implementation of the new policy, there would be big expansion in spinning and value added sectors in Vidarbha region,” he adds.

Airing his concerns over the new textile policy, he mentions, “There are some concerns after going through the draft policy document. The total outlay of funds that has been planned is somewhere around Rs. 21.11 billion, which considering the kind of investment the government is expecting to the tune of Rs. 400 billion, is not at all sufficient.”

“Secondly, regarding the implementation of the scheme, apparently, from the draft document, it appears that it will have the same methodology as TUFS. So, some more clarity in that regard would be better. There is one clause which says that the policy will be further reviewed once the TUFS finishes in March 2012, which needs to be made clearer,” he continues.

“Lastly, and more importantly, objections are being raised that the policy is very Vidarbha biased and western Maharashtra will not benefit. In this context, if the draft remains unchanged until the final policy is announced, it will be the best policy ever. However, the government will have to ensure that the capital disbursement is done within 8-10 months because that is a very big component,” he adds.

Commenting on the pressure of western Maharashtra to make the policy uniformly applicable to the whole State, Mr. Suresh Agrawal of Vidarbha Industries Association (VIA), says, “For the last 2-3 years, we have been continuously pressing the government, especially the CM, to introduce a special textile policy for the main crop of Vidarbha region, i.e. cotton. Accordingly, we are quite hopeful about the new policy that was announced on the last day of the winter session. But now, under the pressure of the western Maharashtra lobby, the CM has indicated that the 12.5 percent subsidy would be made applicable to the whole State, instead of limiting to the cotton growing regions of Vidarbha and Marathwada.”

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