The state of Gujarat in India today announced a new Textile Policy 2012 - ‘Navi Gujarat Vastraniti’ which will help cotton farmers to get better price realizations and also infuse new life in to the textile industry of the state.

The new Textile Policy is expected to attract investment of over Rs.20,000 crore, creating new employment opportunities for over 2.5 million people, 50 percent of them being rural women, during the next five years period.

The objective of the policy is to have an integrated approach to strengthen the value chain - “Farm to Fibre to Fabric to Fashion to Foreign” (5 Fs), which will enhance sustainable growth of farmers and industry.

The policy envisages starting cotton spinning and weaving parks around cotton growing areas and will provide support for energy and water conservation and environmental compliance.

Among the slew of incentives, the policy will provide interest subsidy for value-addition chain from ginning to spinning, weaving, processing, garment manufacturing and technology up-gradation.

It will refund VAT on expansion of existing and new units in spinning and readymade garments; provide power tariff concession for new cotton spinning and weaving units; give financial assistance to Skill Development Centre’s for textile industry and offer financial assistance for technology acquisition for value chain.

For cotton ginning and spinning, the new policy will enhance growth of cotton farmers and ginners, by way of better price realization and to enable them to withstand uncertainty due to price fluctuation, nationally and internationally and encouragement will be provided to establish new cotton spinning activities to strengthen the value chain. Among incentives, it will offer –

- Interest subsidy of 5 percent, without ceiling for the period of five years on new plant & machinery for Ginning & Processing;
- Interest subsidy of 7 percent on new plant & machinery for cotton spinning, as well as for second hand imported cotton spinning machinery with certain conditions, without ceiling for the period of 5 years;
- Power tariff concession on new investment for cotton spinning at the rate of Re.1 per unit for 5 year period;
- Minimum 150-acre land, stamp duty exemption to developers and units, and assistance up to 50 per cent with maximum ceiling of Rs.30-crore for common infrastructure for Cotton Spinning Park with or without Weaving;
- Stamp duty exemption to developers and units in parks, and assistance up to 50 per cent with maximum ceiling of Rs.10-crore for common infrastructure in Parks and Other Textiles Activities;
- Refund of Value Added Tax (VAT) paid by Cotton-based units like ginning, spinning and weaving on purchase of cotton / cotton yarn and remission of tax collected on cotton yarn (applicable to the extent of investment in Plant & Machineries).

For modern weaving, knitting and machine carpeting, the new policy will strengthen the value chain; develop cotton-based weaving and knitting activities to boost the growth of cotton spinning in the State.

Technology up-gradation of existing synthetic and filament power-loom weaving industry will also be done to fulfill the requirement of international market of art silk industry. Gujarat is a leading producer of carpet wool, so, encouragement will be provided to establish modern carpet manufacturing activities in the State. The incentives for these activities will be –

- Interest subsidy of 5 per cent on new plant and machinery, without ceiling, for weaving, knitting, machine carpeting and other textile related activities, also on second hand imported weaving (power loom) with certain conditions, for the period of 5 years;
- Power tariff concession of Re.1 per unit for the 5 year period for weaving.

For the fabric dyeing & processing segment, the policy envisages substantial value addition through technological up-gradation and modernization in dyeing and processing sector, and encourages setting up of energy-efficient and environment-friendly modern dyeing and processing units. By way of incentives the sector will receive –

- Interest subsidy of 5 percent on new plant and machinery, without ceiling for the period of 5 years, in Dyeing and Processing;
- Assistance up to 50 per cent for audit report amounting to maximum of Rs.50,000, assistance up to 20 per cent of cost of equipment subject to maximum Rs.20-lakh, eligible once in 2 years during operation period of the scheme, as support for energy and water conservation and environmental compliance, for Processing Sector and Entire Value Chain.
The garments & made-ups segment is considered a driving force for overall growth of textile value chain. It is also highly labour intensive mainly for rural women. Encouragement will be provided to establish new and modern garment and made-up units even in interior parts of the State. In order to attract investments, the state will offer –

- Interest subsidy of 7 percent on new plants and machinery, without ceiling for a period of 5 years, for garment and made-ups;
- Refund of VAT paid by the unit on purchase of raw material and remission of tax collected on readymade garments, as VAT concession (applicable to the extent of investment in Plant & Machineries).

The technical textiles segment is considered to be one with enormous industrial growth in the State and also great potential world-wide with applications in industries like agriculture, medical, automobile, defense, etc. Development of this segment will cause high value addition on textile value chain enabling to get better realization and sustainability. In order to promote this promising segment, the policy will offer –

- Interest subsidy of 6 percent on new plant and machinery, besides second hand imported machinery with certain conditions allowed, without ceiling for the 5 year period.
For Apparel Training Institutes/Centers the objective is to create skilled manpower, and specifically for rural women employment, an approach will be made to establish skill development activities as per the need. For establishing Apparel Training Institutes, the policy will provide –

- Assistance up to 85 percent, subject to maximum Rs.3 crore, excluding land cost, for setting up Training Institution;
- Need-based support towards equipment for up-gradation of facilities in ITIs.
- Assistance up to 50 percent, subject to maximum Rs.20-lakh, for Training Centres;
- Reimbursement of tuition fees to trainees as assistance @ 50 percent, up to Rs.7,000 per trainee per course;
- Reimbursement of training cost with maximum of Rs.7,000 per trainer per week, as assistance to training to trainers;

Training cost for skill development for weaving:

- Stipend to trainees @ Rs.2,500 per month for three month, and allowance to weavers @ Rs.200/day, and to jobbers @ Rs.300/day as assistance for advanced training to powerloom owner/jobber and worker – as training cost for skill development for Power loom / Weaving Sector.

The policy considers that technology acquisition & up-gradation is necessary to withstand competitive environment both nationally and internationally, so entrepreneurs will be encouraged to acquire technology from abroad. For the purpose incentives like –

- Financial assistance up to 50 percent, with maximum of Rs. 25 lakh per Process/Product, once during the operating period of the scheme. The incentive is also available for manufacturing textile machinery for technology acquisition for entire value chain.