MITRA scheme to enhance India’s global textile competitiveness

11th October 2021, Mumbai:

Union Budget 2021-22 was revolutionary for more than one reason. Not only did it aim to focus on the six pillars of human development including health and wellbeing, and physical and financial infrastructure but also sought inclusive development for aspirational India. One of the highlights was the announcement of the Rs 4,445 crore MITRA scheme to set up mega textile parks across India over the next five years. The scheme aimed to add more jobs in the labor intensive sector besides making textiles more competitive. The scheme was approved by the Union cabinet recently.

Encompassing all sub-sectors

The proposed integrated textile  parks  will  be  developed  under  joint ventures (JVs) between the  Centre  and  partner  state with the latter holding 51 per cent equity. The parks will be constructed by a master developer who will invite investors to set up production units within the parks. The developer will have all development rights within the park and will acquire the park on a 25-year lease extendible by another 25 years. The Central government will fund the park’s internal infrastructure development besides offering ‘competitiveness incentive’ to the production units in the park.

Deeply fragmented, the Indian textile industry has been unable to scale up due to the past policies including those related to the growth of small-scale industries. The government aims to overcome this hurdle through the MITRA scheme. The scheme will encompass all sub sectors including technical textiles. The duration required to set up each park will depend on the time taken by state government to acquire the required 1,000 acre land. Based on this duration, the government will allocate funds to the textile units for a period of five years. Already, 10 states have evinced interest in the scheme. The government will evaluate all proposals before announcing its final decision.

Individual tax benefits for states

The global competitiveness of Indian textile and garment exports is also impacted by rising logistics costs. The MITRA scheme can help resolve this issue by helping businesses scale up and explore raw materials available in the country, opines Ajay Kumar Mall, Managing Director, Mallcom India.

The textile units to be set up under MITRA scheme will enjoy all benefits offered by the states under their textile policy or under their industrial policy. They will also enjoy tax refund benefits offered by the Centre to exporters under the Rebate of State and Central Taxes and Levies scheme, explains Upendra Prasad Singh, Textile Secretary. The scheme will also cover taxes that do not get refunded in the normal course for exporters. It will offer investors a choice between the ‘competitiveness incentive’, or benefits under the PLI scheme.

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