India fast emerging as manufacturing hub
India's technological prowess coupled with a favorable industrial climate is making the country a hub for not just software, but also the manufacturing sector, the Commerce and Industry Minister Kamal Nath reported at the World Economic Forum held at Davos. According to Kamal Nath, the hub of world economic activity is shifting from the Atlantic to the Indian Ocean. India's technological skills together with its attractiveness as a manufacturing centre are fast making it the hub of not only IT-enabled services but also manufacturing.
Superior quality manufacturing centers: Geared up Indian Garment Industry
The diversity of India can be discouraging for any visitor, more so for a person who plans to start a business from such a huge country without an outline from where to start. Over the years, the country has provided numerous regional hubs with niche product specialization, making it more suitable for international players to source and perform in India. Even for the garment industry, the concept of hubs has received a good acceptance with a few major areas developing as product specialists; - Delhi, Chennai, Bangalore, Tirupur and Jaipur are the most famous with other hubs being Ludhiana for flat knits and Amritsar for woolen and warp knit fabric. Each area works as an independent performer, self sufficient in the technical, raw material and labor requirements of specific products. Delhi is well known for its multi product for fashion garments, Chennai for shirts, whereas Bangalore is progressing in garments / trousers and Tirupur a leader in exports of knitwear. Meanwhile, Jaipur is also developing as the ladies wear fashion hub with specialized handwork and ethnic feel.
Recently many Textile Apparel Parks (SEZ, Special Economic Zones) are going to come up. Some of them are mentioned below:
. In order to increase the growth of garment, hosiery and apparel industry in the state, the West Bengal government is establishing a multi-functional "Garment Park" at a cost of Rs. 45 crores.
. Recently, Textile Minister Shankarsinh Vaghela informed the Parliament, that the Center has accorded an approval to establish a special economic zone (SEZ) for textiles at Hassan, Karnataka.
. Establishment of a Special Economic Zone (SEZ) at Amritsar and 16 new mega projects at a massive investment of Rs 15981.17 crore was approved by the Punjab Government's Empowered Committee on Industries.
. The more than half-a-century-old printing and dyeing industry of Jetpur, which is surrounded with the industrial areas of Manavadar, Gondal and Shapar-Veraval, is setting up a Rs 120-crore apparel park within the next six months.
. An eco textile park is going to be set up at Palsana, Gujarat, on National Highway No.8, which will be the first leading public private project. Here over 100 textile units can produce under one roof, and more projects are in the pipe line.
There are about 700 units functioning in India's existing SEZs, offering employment to about one lakh persons, out of which 40% are women. Indian industrialist have so far spend about Rs 1500 crore ($ 340 million) in these units and FDI has been Rs.500 crore ($113 million). Exports from SEZs in 2004 were $ 3 billion (Rs 13,275 crore), about 5% of India's total exports.
Really, development in India textile industry has been inspiring. Production of fabrics has increased from 39844 million sq. meters in 2001-2002 to 43498 million sq. meters during 2004-2005. The per capita availability of cloth has also increased from 22.9 sq. meters in 1991-92 to about 31.0 sq. meters in 2003-04.
As per the latest export figures available (in Rs) for April-August, 2005, except man made textiles (-16.4%), all sectors experienced a lucrative development i.e. Readymade Garment (12.3%), Cotton textiles (0.3%), Wool (30.5%), Silk (2.1%), Handicrafts (17.8%), Coir & Coir manufactures (16.0%) and Jute Goods (13.7%).
The government has permitted foreign equity participation up to 100%, through automatic route, in the textile sector with the only exclusion in knitwear/knitting sector, which is still set aside for SSI. From the SSI sector, the Government has taken again (which was reserved) the woven segment of readymade garment. Pursuant to the pronouncement done in the Union Budget 2005-06, hosiery and knitwear has also been de-reserved from the SSI sector. Apparel Export Promotion Council is making an Apparel International Mart at Gurgaon with the help of the government. The total area of the plot is 5 acres and an Apparel International Mart (AIM) Complex is being made with 250-300 showrooms, which will be assigned to the exporters. This will offer a world class facility to the apparel exporters to promote their products and will work as a one stop shop for well-known international buyers.
An India Exposition Mart is being established at Greater Noida, so that important assistance may be offered to cottage and small scale handicrafts units/exporters in their promotional works. This Mart is an everlasting showcase on the lines of other major international Marts. The project is being invested totally from the industry on the basis of a bankable project. Though, the Government is offering a support of Rs. 12 crores for the project.
Twenty one Powerloom Service Centres (PSC) in the country are being re-harnessed for upgrading through the ongoing delivery and commissioning of the duly granted machineries and other equipments. SSI Powerloom units have been set up under TUFS for benefited for 12% upfront capital subsidy on the pattern of other SSI units.
The Government has planned a Hi-tech Weaving Park Scheme, which will give capital subsidy on modern machinery and construction of Group Worksheds for weavers. Five High-tech weaving parks at a total cost of Rs. 78 crores have been granted for Rabkavi, Vaigai, Palladam, Cauvery and Hyderabad. This will offer additional employment for 12,000 people.
Government has set up a new central sector scheme, from 2005-06, namely "Integrated Handloom Development Cluster Program", for making and promoting handloom products. Under this, the ministry of textiles will consider 20 clusters in the first phase at a cost of Rs.40.00 crore. This will be a Central Sector scheme with 100% Central grant to be liberated directly to the executing agencies.
The Ministry of Textiles has reformed the TCID & APE Schemes into one well-organized "Scheme for Integrated Textile Parks" for pacing up the execution of the Schemes and to realize the vision of attaining export target of $50 billion by 2010. The Scheme is made on Public-Private Partnership (PPP) and foreseeing covering a professional agency for project execution. The main objective of the SITP is to offer the industry with world-class infrastructure facilities for establishing their textile units. The scheme would of help to textile units for satisfying international environmental and social standards.
Delhi the multi product fashion destination
Union Minister of Textile, Shankersinh Vaghela said on the sidelines of `Images Fashion Forum', in Mumbai, that the government would spend a total sum of Rs 300- 400 crore over a period of one year for the development of Delhi Haat kind of Haats across the country and there would be at least one Haat in each capital of the state.
On the payments made till date under the TUFS scheme of the government, Vaghela reported that till date, Rs 31,000 crore worth of loans have been paid out under TUFS and loans calculating to Rs 18,000 crore have been allotted under the UPA government. The government would also come up with 18 apparel parks in one and a half year under the Integrated Textile Park Scheme. According to him, each apparel park at an expected investment of Rs 100 crore is projected to employ 15,000 people and the government would widen subsidy for the parks.
Fashion is a strong point in the north with an appealing combination of woven and knit choices as a value-addition. Many factories in Delhi - NCR region are working with an ability to manage different styles and fabrics on a regular basis. The labor in this region is generally from outside and men manage the machines with heavy focus on value-addition and embellishments. This is not to articulate that Delhi and its nearby areas of Gurgaon, Manesar, Faridabad, Noida and Khandsa are only making ladies' and kids' fashion wear. There are lots of companies who have spent a huge amount for technology determined factories for more structured and basic garments. Though, these companies are the lead players who have a superior position thought, particularly made infrastructure for their buyers to offer them with multi products rather than trailing business to other areas specialising such products.
Many such players in this area are Orient Craft, Shahi Exports, Modelama, Richa Garments, Orient Clothing, SPL,Pearl Global, Matrix and Addi Industries, all of whom have made superior value in various product ranges and are servicing some of the best retailers / brands in the global market. Product Development is becoming a focal point in Delhi and technology is mainly targeted on basic sewing and value? addition machines. Even in the case of products that are offered in other areas, the focus is on value? addition and multiplicity in product offerings.
Special Economic Zone (SEZ) establishment at Amritsar and 16 new mega projects at a massive investment of Rs 15981.17 crore were approved by the Punjab Government's Empowered Committee on Industries. These projects would generate a total of 4.30 lakh jobs.
M/s DLF Universal Ltd would develop SEZ at Amritsar, which would cover an area of 1000 acre. Other projects approved by the Committee include SEZ project on 2500 acres at Jalandhar and in Ludhiana, at an investment of Rs 1800 crore, providing 4000 jobs.
Ludhiana warming up
Textile projects at the cost of Rs 1500 crore will be set up by Ludhiana Integrated Textile Park Ltd, in Ludhiana district, providing jobs to about 85000 people. The Research and Development project in the field of agro industries with an investment of Rs 92 crore in Ludhiana district will help generate employment for 91000 people. Another industrial park at Mohali and an integrated textile park at Ludhiana with an investment of Rs 2037.61 crore and generating employment for 1,06,000 people is also going to be set up.
With a joint venture between Punjab Small Industries and Export Corporation Ltd and Apparel Exporters Association of Ludhiana, a 100 per cent export oriented mega apparel park at Doraha on GT Road in Ludhiana is being planned. The projected apparel park will be proliferated over 100 acres of land, of which 82 acres have been acquired and the remaining land will be acquired in the coming months. Infrastructure for the park will be established in a year's time. The park will become ready within the next two years. Already, 115 companies are interested in establishing their units in the park that will also be having road, rail and airport connectivity. A common captive power plant is also being projected. Further, a commercial complex, a business centre, a conference hall and an exhibition centre for buyer-seller meets are also projected.
Ludhiana with its traditional strength in flat knit apparel is another centre which has created a wide platform for small quantities and high value products. The city is popular for any buyer who needs sweaters in woolen as well as cotton blends. Nearly all buying organizations functioning with sweaters have vendors in the city. Many of the brands supplying from Ludhiana cover Sears, Target, Espirit, GAP, H&M, Tom Taylor, NEXT, to quote a few of the more design oriented buyers. In addition, technologically, the center is equipped with processes to offer innovation and value-addition to flat knits, which is in huge demand among the buyers. The hub is exporting nearly $18 billion, which is growing rapidly. The leading exporters cover Oswal Group, Nahar Group, Vardhman, Greatway, Goyal Knitwears, Mohini Exports and Bhandari Exports.
The central government intends to establish a Rs.7-billion international convention centre in Mumbai, which will work as a hub for the textile industry, Textile Minister Shankersinh Vaghela said on the sidelines of 'Images Fashion Forum', in Mumbai.
Jaipur for Handwork and Traditional Prints
Jaipur is emerging as a small quantity high fashion centre for art work and handwork products. This city is ideal for the products with works like bandhini, block printing and hand embroidery to the western silhouette, basically working with Indian fabric. Also, it is emerging as the main hub for home furnishing and fashion accessories, and it is well-known amongst Japanese buyers peeking for fashion items and boutique owners across the globe. Some of the leading names cover Garment Craft, KK International, Goyal Fashions, The Choice Fashions and Sopra International, to quote a few.
The Kandla Special Economic Zone (SEZ) has 11 units that were established for sorting and grading used clothing meant for re export to African countries. Under Open General Licence, the government relaxed imports of used clothing after the Kutch earthquake of 2001.
The more than a half-a-century-old printing and dyeing industry of Jetpur, surrounded with the industrial areas of Manavadar, Gondal and Shapar-Veraval, is setting up Rs 120-crore apparel park within the next six months. The park will inculcate a new life in the ailing industry well-known for its prints.
Likely to establish near Pithadia village, the apparel park will have a huge treatment plant, washing plots, as well as printing and dyeing factories. While the State Government has agreed to provide Narmada water for the printing and dyeing units, the Jetpur Printing and Dyeing Units Association will bear the expense of building the treatment plant with a capacity of around 5 million liters.
Furthermore, all 530 units which are currently scattered in the city will be transferred to the park, even as the pipeline network to release treated water from the plant to the gulf of Porbandar would solve the environment problems. The expert and industrialist believe that the apparel park will be instrumental in increasing the turnover between Rs 190 crore and Rs 200 crore per annum with an addition of 100 new units, and will raise the production by at least 25 per cent in the first year itself. The park will generate employment for additional 20,000 people from this area.
'Khanga' & 'Kitanga' style of cotton dressing which is mostly seen in the African sub-continent was made at Jetpur and exported to African countries. Jetpur alone fulfilled 80 per cent of the need of Khanga-Kitanga segment till 2001, but as low-priced Chinese products were introduced in the market, Jetpur's share decreased to 40 per cent.
An eco textile park is going to be set up at Palsana, Gujarat, on National Highway No.8, which will be the first leading public private project, where over 100 textile units can produce under the one roof. The project will be constructed at a projected price of Rs.115 crore, generating employment opportunities for over 20000 persons, which is likely to be completed by July 2007. The project will be supported by 40% subsidy from the Union Government and information on infrastructural will be given by the State Government.
Pradip Hi-Tech Textile Park Ltd, promoted by Pradip Group has been planned to be built in 200 acres in Sanand near Ahmedabad, to manufacture garments and fabrics for exports as well as home textiles, with an investment of Rs 720 crores. The Group plans to invest in different phases and is scheduled to start operations from 2007 with separate units for weaving, spinning and processing to get the final product, said Pradip Karia, founder of the group. Around Rs 110 crores will be initially invested of which 65 percent will be funded by four banks, said Karia. Around Rs 205 crores is planned to be raised through Initial Public Offer (IPO) by August 2006 for further investments, said Karia. This park will become the largest weaving and spinning unit of western India, informed Karia.
Technology Driven Bangalore for Trousers & Structured Garments
Bangalore is growing as the techno-savvy structured garment producing hub of the apparel trade in accordance with its image as the IT Capital of the country, in the south. The manufacturers in this center are, by and large, huge establishments with latest technology and IT Systems for greater and superior productivity in basic garments like trousers and jackets. Many trouser and jacket producers have emerged in this region in the last few years. Even factories from the north have sped in, in Bangalore, for making trousers and jackets to get the benefit of the skilled labor and technical know how that this region has gained over time. The large establishments cover Gokaldas Exports, Gokaldas Images, LT Karle, Sonal Garments, Texport Syndicate and K Mohan, all of whom are recognized for their efficiency and quality products.
Many new establishments other than apparel producers have also arrived to get benefit of the developed strengths in trouser and structured garments. Silver Spark and Everblue, both from the house of Raymonds, are among this establishment.
The concentration in this area is on production efficiency and training to satisfy international standards in production.
Tirupur the city of knitwear
Of all the hubs, Tirupur, normally recognised as the knitwear city, has observed a quicker, rather incremental growth of the knitwear sector from India in the last 10 years. It is mainly due to of the development that the city has experienced during this time. Today, approximately every leading retailer is purchasing knitwear from this city due to its cost effective production. The totally incorporated nature of knitwear production, from spinning to shipment, has observed this industry increase not only in quality but also value-addition and fast track fashion. Technology is a main motivator and vendors are spending in capacity and developed systems for larger gains. The Tirupur apparel park, which is to come up very soon, is a self-sustaining center with every facility appealing to international buyers. Some of names cover Eastman Exports, SP Apparels, SCM, Best International, Centwin, Network Clothing and Stallion Garments, to name a few.
As these centers develop on their individual strengths, efforts are in progress to increase other hubs in different states. At present, the Andhra Pradesh Government has done a special endeavor to request majority exporters from all over the country to invest in the State. They have also provided facilities that are very appealing, like hire and fire policy for labor and wage rates that are 15 per cent economical than Chennai. Furthermore, many apparel parks are in the pipeline in an effort to offer better facilities for effective and global garmenting needs.
Netaji Apparel Park (NAP) is spread across 166 acres on the Avanashi-Perumanallur National Highway, at New Tirupur, and is India's first and largest apparel park which now offers employment to nearly 7,000 people.
It is supported by the Tirupur Exporters' Association (TEA). NAP houses 60 industrial buildings with 20 lakh sq ft built-up areas. So far, Rs. 95 crores has been invested on its infrastructure. The Center offered nearly Rs.14 crores as grant.
As the park becomes fully functional, about 20,000 more people will get employment. The park possesses 2.2 MW captive power plant, telephone exchange, bank, sewage treatment system and uninterrupted water supply.
The leading center is Chennai, which has always been well-known for production of shirts, its specialty, and basic products in large quantities. This centre has gained excellent growth in the last few years and the major problem at present is the low margins offered in basic products. Though, the center has reacted well and enhanced in fractures to increase capacity and productivity. In joint venture with Sri Lankan and Indonesian firms many large companies are coming up in Chennai. Shirts calculated to 60 per cent of the production in the city with underwear and lingerie products. The larger exporters cover Rattha International, Leela Scottish, Meridian Apparels, Medident India, PS Apparels and SM Apparels. The labour force is mainly women who are accepted to be very committed, adding to the soaring productivity. The main areas are developed in working efficiency, better technology and product development.
Sivakasi foreseeing to textile sector
After the successful establishment of the fireworks industries, Sivakasi is now going to establish textile parks. Industrialists are attempting to bring home an 'Integrated Textile Park' to make their dream of changing the `fireworks town' into an industrial hub. 'Kutti' Japan now looks towards textile industry for its future potential development.
According to experts, the textile town of Tiruppur possesses a plan to almost double its export orders from Rs.6,000 crores to Rs.10,000 crores by 2010. But it is not so certain. (Though the current export from Sivakasi is about Rs. 2,000 crores.)
The match and fireworks industries that flourished due to a strong workforce are now witnessing migration of workers to Tiruppur and Coimbatore. At least 5,000 workers have left in search of better prospects in the textile sector. The workers, particularly from the younger generation, do not prefer laborious and tiresome work.
The development of infrastructure would place Sivakasi to a better position. Its nearness to Tuticorin port and its huge development on execution of Sethusamudram Ship Channel Project, and the recently renewed broad gauge railway line are the few projects that would help in Sivakasi's growth.
Recently, Palanimanickam, Union Minister of State for Finance, announced at a textile seminar, that the Union Government was giving all the concessions and incentives needed, to the industrialists.
The Minister said that the textile industry had a bright future and the entrepreneurs should work hard to progress. He also added that industrialists who take loans from banks should repay them in time. Palanimanickam informed that international banks were also lending their services to the industry players.
He assured that The Union Government would help to set up an integrated textile park in Sivakasi.
At Coimbaitore, the three weaving parks approved by the Centre (Palladam, Cauvery and Vaigai parks) and two more projected (in Karur and Erode) are part of a Textile Park Consortium, which is supported by them jointly with an Italian company, Carrera Holdings Inc. The other contributors are the Hyderabad Hi-Tech Textile Park and the Chincholi Integrated Textile Park (Sholapur).
West Bengal establishing multi-functional Garment Park
In order to increase the growth of garment, hosiery and apparel industry in the state, the West Bengal government is establishing a multi-functional "Garment Park" at a cost of Rs 45 crores.
Declaring the state-of-the-art project to be completed by 2007, West Bengal Industrial Development Corporation (WBIDC) Chairman and State Industries Minister, Nirupam Sen, reported to the media that the state government had already obtained about 8.5 hectares land at Beliaghata in South-East Kolkata for this reason and WBIDC and ICICI Winfra had been selected as the Project Consultant.
Under the project a five-storey Standard Design Factory (SDF), meant for establishing manufacturing units, and a three-storey Common Facilities Building (CFB) would be set up as common service and logistic support units for the manufacturers.
Considering that the location of the park was ideal for the garment industry, because of it having superior connectivity with the airport, Kolkata port, railway stations and national highways, a scheme had also been made to strengthen the approach road to the park and its adjoining canal.
The park will be made in two phases, adding phase-one of the 'dream project' would include three SDF buildings, the common facility building, a working women hostel and other auxiliary service buildings.
Two more SDF buildings would be added in phase-two of the project and each SDF buildings in phase-one would have nearly 1,20,000 square feet super built-up space. One SDF building would be reserved completely for smaller units, around 3,300 sq.ft each, while other two SDF buildings would include medium and large units of super built-up area of about 5,600 sq.ft and 11,300 sq.ft accordingly.
Altogether, nearly 70 manufacturing units would be given space in the first phase of the project, adding after phase two was completed the park would given nearly 100 more units, which was projected to create employment for 8,000 workers.
The construction of the project has already started and the first phase is projected to be completed by September 2007.
Garment and hosiery manufacturing units of that region and their associations had showed strong importance for booking spaces at the SDF building.
Central: Integrated Textile Park in the offing at Madhya Pradesh
Integrated textile park is in the pipeline at Satlapur in Raisen district of Madhya Pradesh (MP) under the aegis of Madhya Pradesh State Industrial Development Corporation (MPSIDC).
The Corporation follows the example of Parks set up in Gujarat, Maharashtra, Tamil Nadu and Rajasthan.
Infrastructure Leasing & Financial Services (IL&FS), consultant for this project, is conducting feasibility survey, which will be sent to the Project Approval Committee (PAC) of the Textile Ministry for its approval.
This park will help further in achieving textile and clothing export target of $50 billion by 2010, and therefore, government plans to create such 25 textile parks of international standards at potential growth centres by 2007-08.
Some textile firms have shown interest in investing about Rs 2,500 crores in the Park. Proposals for investment in this park have already been received from Nahar Spinning Mills, Anant Spinning Mills and few other companies, said Raghav Chandra, Managing Director, MPSIDC.
New SEZ rules announced
In an attempt to make India a service and production center, the government has declared the long-awaited Special Economic Zone (SEZ) Rules that is anticipated to fetch Rs.100,000 crore investments and generate five lakh jobs in next three years.
Declaring the SEZ Rules, Commerce Minister Kamal Nath reported to the media that the rules provide single window clearance and income tax exemptions for 15 years. "Tax exemptions and fiscal incentives are clearly spelt out in the Act and Rules and any change in them could only be done through an approval by the Parliament," Nath said adding the Rules provided up to 100 per cent sale of SEZ product in Domestic Tariff Areas after payment of customs duty. Besides giving a stable policy regime, the SEZs are projected to attract large foreign investment, with exports from the zones estimated at five billion dollars this fiscal. As many as 117 SEZs have been approved, out of which 51 have got a final approval while the rest have received in-principle clearance. With the SEZ Act and Rules now set, Nath said many large, multi-product SEZs that have so far been not capable to receive financial closure will now move fast. "It is anticipated that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure and productive capacity, leading to generation of additional economic activity and jobs," he added.
Providing details of the Rules, which have taken about nine months to be formulated after the passage of legislation, Nath said there would be total income tax exemption for first five years for units in zones. The IT exemption would be 50 per cent during the next five years. In the following five years, the tax exemption would be on 50 per cent of profits ploughed back. Nath said that the units in SEZ would also be exempted for 10 years from payment of dividend and minimum alternate tax.
The Commerce Minister said the SEZ Act did not provide any liberalised labour laws, which have been totally left on the state governments to judge on how much flexibility they permitted to offer. Nath said the multi-product SEZs should have a minimum space of 1,000 hectares, while services SEZ should have a space of 200 hectares at least. For gems and jewellery, information technology, renewable energy, bio-tech and other sector specific zones, the minimum space is 10 hectares. In case of north-eastern states, Jammu and Kashmir and Union territories, these provisions have been relaxed and multi-product SEZs can come up in 200 hectares, while sector specific zones can come up in 50 hectares.
The rule offers to establish the Overseas Banking Units, which will be directed by Reserve Bank regulations. These OBUs will also be exempted from income tax on the lines that SEZ units and Non resident Indian deposits in these banks would not attract TDS (Tax Deduction at Source) on interest payments.
The rules have been set after an extensive consultation with developers, potential investors, manufacturers, exporters, services providers and various departments of central and state governments, Nath said adding that of the 600 suggestions 400 have been included. Nath said every SEZ will have a Development Commissioner who will work as the nodal authority and single window for all clearances.
The SEZs would be approved by the Board of Approval, which will have representatives from diverse Ministries and trade. Nath reported to media that the Left Parties have accepted the SEZ Act and the rules that have been set covering the tax incentives. Of the 117 Special Economic Zones set over 15 states and two union territories, 28 will be multiproduct ones, while 55 would be in IT, four in pharmaceutical and three each in gems and jewellery, handicraft, apparel and auto components. There would be two each in electronics, footwear, textiles and port-based SEZ, while one each in biotech, telecom, leather, food processing, petroleum, rubber. Reliance Industries, Reliance Energy, Nokia, Mahindra and Mahindra, Wipro, Ranbaxy, Biocon and Adani Exports are among the companies who have already got sanctions to establish such zones in various states, Nath said. In addition, overseas companies mainly from Japan and Singapore have also showed interest, he added. There would also be three Free Trade Warehousing Zones. The rules will also be applicable to seven SEZs which are already functioning. He said that eight other Export Processing Zones have also been transformed into SEZs.