Surat: Textile entrepreneurs in the country’s largest man-made fibre (MMF) hub in Surat are rejoicing as the Gujarat Government announced the long-awaited Textile Policy 2024 on Tuesday. The new policy, which had been delayed for 10 months since the expiration of the previous policy on December 31, 2023, introduces significant financial incentives aimed at revitalizing the textile industry in Surat and across the state.
Key Provisions of the Textile Policy 2024
For the first time, the new policy introduces a 25% capital subsidy, a substantial shift from previous policies that did not include such a provision. Additionally, while the interest subsidy has been reduced from 5% to 2%, the Rs 1 per unit power subsidy has been extended to all textile units. The Gujarat Government has allocated Rs 1107 crore to provide financial assistance to approximately 5,592 textile units in Surat and other parts of the state.
The shift to include capital subsidies marks a significant change, providing additional benefits to textile traders who can now avail a portion of their investment costs as direct financial support. For example, if a textile entrepreneur invests Rs 100 in their business, Rs 40 will be given as a subsidy by the government, greatly reducing their capital expenditure.
Previous Textile Policies and Industry Impact
The previous textile policy, announced in 2019 for a five-year period, primarily focused on interest and power subsidies. It included a 6% interest subsidy, capped at Rs 20 crore annually, along with a Rs 2 to Rs 3 power subsidy for new investments, and incentives for plant and machinery expansion above 25%. Additionally, a 50% subsidy on energy and water audits (up to Rs 1 lakh) and a maximum of Rs 30 lakh subsidy at 20% for small machinery purchases were provided.
In contrast, the Textile Policy of 2012 offered a 6% interest subsidy for technical textiles and 7% for spinning, a Rs 1 per unit subsidy for cotton industries, and various subsidies for machinery expansion and energy audits. However, like the 2019 policy, it did not include a capital subsidy, leaving entrepreneurs to shoulder significant upfront costs.
Addressing Delays and Challenges
“The delay in announcing the new textile policy led to notable consequences, with around 160 textile units from Surat relocating to Navapur in neighboring Maharashtra, where they benefited from lower electricity rates and other incentives offered by the Maharashtra government. This migration underscored the need for timely and competitive policies to retain Surat’s textile units and keep the region’s industry thriving” said Mayur Golwala, leader of Surat textile industry.
Growth Potential and Infrastructure Hurdles
Over the years, Surat has built a reputation for its successful textile sector, especially in sarees and dress materials. Products from the city are exported in large quantities both domestically and internationally. However, despite its success, the lack of robust infrastructure remains a critical challenge. The city’s potential to scale up and compete globally is hampered by inadequate facilities, making it difficult for Surat to match the infrastructure seen in countries like China and Bangladesh.
Bangladesh, in particular, has surged ahead in the global textile sector, especially in garment manufacturing. The infrastructure for garment production in Bangladesh is so well-developed that it has outpaced Surat, despite Surat’s capability to produce high-quality textiles. The lack of comprehensive infrastructure, including dedicated textile parks, has prevented Surat from fully capitalizing on its production potential.
Efforts to Enhance Skill Development
Recognizing the need for skilled labor, the Southern Gujarat Chamber of Commerce and Industry (SGCCI) is planning to launch a Skill Development Center aimed at training workers to operate modern machinery and enhance their technical skills. This initiative is crucial, as local industrialists are now increasingly turning towards garment manufacturing—a segment that has the potential to further expand Surat’s market reach.
An industrialist from Surat has already invested in 1,000 machines dedicated to garment manufacturing, showcasing the growing interest among local entrepreneurs. Given that Surat produces the essential raw material—fabric—this shift towards garment production could help the city secure a more robust position in the global textile market.
Opportunities in Global Trade
Surat’s textile industry also faces an opportunity to expand its footprint on the global stage. With the current political crisis and instability in Bangladesh, many international buyers are reconsidering their supply chains and looking for alternative partners. If Surat can address its infrastructure issues and develop a skilled labor force, it could position itself as a competitive alternative for international trade, potentially strengthening India’s textile exports.
