Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Industrial Development of Vidarbha & Marathwada (Textile Sector) Brief statistics Scope of work being done: • Identify potential growth areas in textile • Increase Farm Income in relation to cotton. • Increase Employment • Ensure success of Textiles in the region Employment opportunity: Textiles industry has the potential to offset unrest in the agriculture sector on which almost 55 per cent population depend for livelihood. Maharashtra contributes to about 11.4 % to India's textiles and apparel output and is the second largest employer in Maharashtra and contributes to 28 % of India's total exports. The Textile Policy of Maharashtra 2011 17 emphasises establishing processing units at various levels for the assured long term development, expansion of the textile industry and growth of employment in the State. Key Statistics - India Textile plays a major role in the Indian economy It contributes 14 per cent to industrial production and 4 per cent to GDP With over 45 million people, the industry is one of the largest source of employment generation in the country The industry accounts for nearly 15 per cent of total exports The size of India’s textile market in 2015 was around USD108.5 billion, which is expected to touch USD226 billion market by 2023, growing at a CAGR of 8.7 per cent between 2009-23E Snapshot – Textile Industry in Maharashtra • Textile industry has been always been important in India because of its immense contribution to Indian economy in terms of • Foreign Exchange earnings • Employment generation • Support to Agriculture • Contribution to GDP • Maharashtra is a very Important State for Textile Industry • Accommodates major proportion of power looms • Largest no. of modern looms • Large no. of cooperative spinning mills • Major cotton growing State (average 60 to 65 lacs bales per year) • Most of the cooperative units are Spinning Mills and Plain Power looms • A few Units of Modern looms (Automatic and Shuttle less) • Government of India has been supporting Textile Industry by providing various incentives such as TUFS, SITP and Cluster Development Schemes etc. • Maharashtra Government has announced new textile policy for supporting this industry • Major Schemes under State Textile Policy • Scheme of Interest Subsidy on long term loans linked to the Centrally Sponsored TUFS. • 10% Capital subsidy to new textile units set up in Vidarbha, Marathwada and North-Maharashtra • Capital subsidy for modernisation of power-loom units of S.C./S.T./Minorities • Equity support as per the existing financial pattern to co-operative spinning mills in Vidarbha, Marathwada and North Maharashtra • Support and loan as per the existing financial pattern to co-operative power-loom units in the State. • Capital subsidy to integrated textile parks.(9% of the project cost or 9 cr. whichever is less) Vidarbha: A Snapshot Indicator Value Area (Sq. Km) 97,404 (31.6% of Maharashtra’s Area) Population (mn. 2011) 23.0 (20.5% of Maharashtra’s population) GDP (INR bn. 2010-11) 1,670 (15.6% of Maharashtra’s GDP) Per Capita Income (INR 2010-11) 65,368 GDP growth (CAGR, 20082010) 6.7% Revenue Division Nagpur & Amravati No. of Districts 11 Literacy Rate 83.6% Sex Ration (Females pet 1000 males) 954 Road Length 61,018 km Airport Dr. B. R. Ambedkar International Airport, Nagpur Port Dry Port Nagpur Main Economic Cities Akola, Amravati, Chandrapur & Nagpur Vidarbha’s Economy GDP at Current Prices (INR bn. 2010-11) Contribution to Maharashtra’s GDP (%) Buldhana 121.9 1.1 45,699 4.3% Akola 117.7 1.1 58,627 7.2% Washim 62.4 0.6 52,075 16.3% Amravati 201.3 1.9 63,270 10.0% Yavatmal 188.6 1.8 63,469 2.7% Wardha 91.9 0.9 61,391 3.8% Nagpur 513.4 4.8 96,458 9.6% Bhandara 77.5 0.7 57,094 1.6% Gondia 70.9 0.7 50,042 -2.3% Chandrapur 175.9 1.6 67,641 7.3% Gadchiroli 48.5 0.5 43,058 0.6% 1,670.0 15.6 65,368 6.7% District Vidarbha Per Capita Income 2010 – 11) (INR, GDP growth (CAGR, 200809 to 2010-11) Vidarbha’s Demography District Population (mn, 2011) Literacy Rate (%, 2011) Urban Population as % of total population Buldhana 2.6 82.09 21.2 Akola 1.8 87.55 39.7 Washim 1.2 81.70 17.7 Amravati 2.9 88.23 35.9 Yavatmal 2.8 80.70 21.6 Wardha 1.3 87.22 32.5 Nagpur 4.7 89.52 68.3 Bhandara 1.2 85.14 19.5 Gondia 1.3 85.41 17.1 Chandrapur 2.2 81.35 35.1 Gadchiroli 1.1 70.55 11.0 Vidarbha 23.0 83.6 35.1 Maharashtra 112.4 82.91 45.2 Category Vidarbha’s Education Profile Vidarbha region has substantial potential for industrial development. In recent times, the Government of Maharashtra (GoM) has made efforts to tap the economic potential of the region. Out of 169 mega projects sanctioned in Maharashtra, 56 entailing an investment of INR 350bn are coming up in Vidarbha. Furthermore, in 2010, the Maharashtra Industrial Development Corporation (MIDC) allotted INR 2bn for development of industrial areas in Vidarbha. More recently, the GoM through its Industrial and Textile policies is providing special impetus for increasing industrial investments in various sectors which can be potentially developed in the region. No. of Institutes Intake Capacity Engineering 220 57,990 Vocational Skills 470 70,700 Management 68 5,850 Vidarbha Data District Wise Details of Cotton Production (2010 – 11) Area (Ha) Production (Bales) Productivity/Yield (Bales/Ha) Akola 1,67,800 2,68,900 1.6 Amravati 2,04,300 3,36,200 Buldhana 2,51,500 Washim District Wise Textile MSMEs (2010 – 11) No. Of Enterprises Employmen t Investment (in Lacs) Akola 199 1641 4804.8 1.65 Amravati 68 994 3296.28 4,36,100 1.73 Buldhana 159 2497 5973 62,000 1,28,700 2.08 Bhandara 51 701 599 Yavatmal 4,79,800 7,75,900 1.62 Chandrapur 62 755 1146 Bhandara 0 0 0 Gadchiroli 11 117 52.62 Chandrapur 93,300 1,26,300 1.35 Gondia 20 146 50.22 Gadchiroli 2,800 4,300 1.54 Nagpur 441 7095 4201 Gondia 0 0 0 Wardha 143 1501 7613.97 Nagpur 80,800 1,26,000 1.56 Washim 22 194 56.3 Wardha 1,90,600 2,63,000 1.38 Yavatmal 228 2525 3833 15,32,900 24,65,400 1.35 1404 18166 31626.19 District Vidarbha District Vidarbha Key Facts – Market Catchment The fundamental strength of the textile industry in India is its strong production base of wide range of fibre/yarns from natural fibres like cotton, jute, silk and wool to synthetic /man-made fibres like polyester, viscose, nylon and acrylic India accounts 63 per cent of the market share of textiles and garments With production of 5,984 million kg, India was the largest producer of cotton in 2015-16. Indian textile industry accounts for about 24 per cent of the world’s spindle capacity and 8 per cent of global rotor capacity India has the highest loom capacity (including hand looms) with 63 per cent of the world’s market share India accounts for about 14 per cent of the world’s production of textile fibres and yarns (largest producer of jute, second largest producer of silk and cotton; and third largest in cellulosic fibre) India is the second largest producer of Manmade Fibre and Filament, globally, with production of around 2,511 million kg in 2015-16. Maharashtra Textile Data Cotton/MMF Textile Mills (Nos.) 4000 3500 173 174 174 175 1332 1307 1325 1335 0 198 0 197 6 200 6 201 3000 2500 2000 Spinning (SSI) 1500 1000 Weaving Mills (Non SSI) Composite (SSI) Composite (Non-SSI) 1771 1757 1776 1784 2012-13 2013-14 2014-15 2015-16 Spinning (Non-SSI) 500 0 Production of Fibres 2000 1800 1600 1400 1200 1000 1263 1307 1344 1347 Raw Cotton 800 600 400 200 Man-Made Fibres 370 398 386 338 2012-13 2013-14 2014-15 2015-16 0 Maharashtra’s Key Economic Figures 2014-2015 Maharashtra India Share of India % Population (2011 in million) 112.4 1211 9.3 Literacy Rate 82.3 73 NA FDI (US $ bn) 78.3 278 28 GSDP/GDP at market price (US $ bn) 267.7 1865.1 14.3 Per Capita GSDP/GDP (US $) 2283 1472 NA % of population living in Urban Areas 45.2 31.1 NA Exports (US $ bn) 66.5 278.6 23.9 Source: Economic survey of Maharashtra 2015 - 16 Maharashtra’s EODB rankings relative to other Indian States Maharashtra Gujrat Andhra Pradesh Rajasthan EODB overall 8 1 2 6 Starting up business # # 2 5 Land allotment & obtaining construction permit 3 2 5 4 Complying with environment procedure # 1 2 3 Complying with labor regulations # 2 4 # Obtaining infrastructure related utilities 1 2 5 # Registering & complying with Tax procedures # # 2 3 Carrying out inspections # 2 3 5 Enforcing Contracts 1 3 # # Source : World Bank # - Beyond top 5 rankings Employment Opportunities Breakout Growth Total Employment Women Employment Domestic Exports Share of World Trade 2014 2014 2025 49 mn 74 mn 103 mn 52 mn 72 mn 34 mn $ 62 bn $35 bn 5% $ 94 bn $84 bn 7% $ 130 bn $157 bn 10% This will take INDIA to 68 mn jobs & 80 bn in exports by 2025 Women/Rural Employment – Highest in Textile Industry Social Impact % share of women 70 60 60 • 51 50 • 40 30 30 20 20 12 10 0 22 • 15 • Promotes quick employability: Only 45 days to train the textile worker Social Transformation: Reduces Poverty Promotes employment in rural and semi-urban areas Socially acceptable occupation for women especially in rural areas Large scale employment, empowers women, provides jobs to the unskilled and school dropouts Business Driver The textile and apparel industry can be broadly divided into two segments Yarn and fibre (include natural and man-made) Processed fabrics (Cotton & technical textiles),Readymade Garments and apparel Weaving Knitting Cotton & Processing Textiles Cotton & Non Cotton Farming Raw Cotton Ginning Cotton Seed Processing Weaving Bales Spinning Processing Knitting Dying Garmenting Fabric Garmenting Printing Washing Processed Fabric Contract Farming A very small % of farmers in Vidarbha engage in contract farming. Small land holdings and low quality of agricultural produce is a major hindrance in contract farming in Vidarbha. In Wardha district, farmers have formed a producer company – Wardha Cotton & Soya Producer Company (Wardha PC), this eliminates the middleman and directly signs agreements with the private companies. Currently in Vidarbha Contract Farming in cases of Cotton, Soyabean and Poultry are prevalent Key Statistics About 29% of Farmers in Vidarbha are Marginal and hold less than 2.5 acres of agricultural land. About 37% are small farmers which hold 2.5 – 5 acres of land About 34 % of farmers have landholding greater than 5 acres Major Contract Farming Companies in Vidarbha Company Areas Reliance Fresh In Bhandara district for sourcing of Tomato, Brinjal & Paddy Jayant Oils In Vidarbha region to procure Castor seeds Tata Chemicals In Vidarbha region to procure Tur Dal Dabur In Akola district to procure Lemon & Pomegranate Venkatesh Hatcheries In Nagpur district for contract Broiler Farming Key Challenges Setting/Scaling up Restrictive labor laws • No fixed term employment • Limited scope to add trainee/apprentices Sub-scale Facilities • Facilities < 1/4th as big as Bangladesh, Vietnam, China • Hassles in clearances Fragmented clusters Scale creation efforts (Ex. SITP) have not yet created sufficient investor appetite Hassles in clearances, operations ,labor Running Operations Sharp Wage increases • Sharp wage increases in key states (> 20%) • Cap on overtime hours High input material costs • High cotton contamination, increasing fabric prices by 12% High Energy Costs • 20-25% higher cost on open access due to Cross Subsidy Surcharge (CSS), cess, taxes • Cross subsidy adding 20% to energy cost Sell into Key Markets Export Subsidies • 17% VAT rebate on export in China compared to 7.6 – 9.9% in India Logistics • High domestic transport time (4-7 days) • 3 week gap against China, Vietnam • 7-10 days gap into Bangladesh Taxes, Duties, Cess Uneven excise duties between Cotton, MMF (12.5%) Productivity & Value >50% gap in cotton productivity per head compared to Vietnam, China Investing / Financing Entrepreneurship High working capital costs High Costs of upfront investment Processing, weaving highly capital intensive and intensive on technology. Limited efforts on Innovation Especially Processing, Knits, Synthetics Recommendations on Challenges Setting/Scaling up Running Operations Allow fixed term employment Change in Labour Landscape • Remove cap on overtime • Ensure predictability to wage growth • Promote Mega Projects • Central support for job creation Rationalize Taxes/Charges • Energy – Reduce cost through electricity subsidies for apparel, fabric, made-ups (on both OA/grid power). • GST – Neutral rates for Cotton/MMF India Specific Clusters • State infra under PPP for SMEs – low cap. Intensity • Flexible incentives for India specific clusters • TUFS Support Job Creation • Wage support through DBT on PF/ESI for all new employment generated. • Additional IT deductions for new wages • Incentive growth in notified areas through different wage schedules. Drive Productivity & Value Cluster based programs to help SME’s Sell into Key Markets Promote Export • Export VAT rebate under GST • FOB rebates on export matching domestic GST rates • Adjusted for fuel, power • WTO compliant support beyond 2017, with additional incentive for synthetic De-bottleneck Logistics • Port infrastructure • Inland entry into Bangladesh • Accelerated infra into Clusters Break Trade Barriers FTA with EU ; Textiles on early harvest Investing / Financing Entrepreneurship Ease Access to Finance • Capital schemes similar to TUFS : Higher capital subsidy for processing. • Working Capital subvention for domestic manufacturers (From Yarn to Made-ups) • Entrepreneurs not investing 10% of asset base (excl. land/building) in new machinery lose benefits. Energy Costs : Energy Reforms Issue Current Proposed: Requires support from states State Power • High energy costs in key hubs • For both state grid power and open access • Driven by cross subsidy/ cess Cost of fabric higher by 1.5-2% due to high cross subsidy • Adversely affects profitability of energy intensive industries like yarn Open Access Power • Various charges added (Cross, Subsidy, Cess, RPO) • Totaling upto Rs. 3 per unit in key states like Gujrat, MP • More than 40-50% tariff Power subsidy to Spinning, Fabric and Processing units International Trends Historical shift in apparel, made-ups and textile industry • Billions of dollars vacating China • Trade blocs redefining landscape e.g. TPP Significant employment challenges in India, especially for • Unskilled • School dropouts • Women An opportunity and a mandate Unique opportunity for the apparel, made-ups and textile sector • To drive employment in India • To continue to serve our rapidly growing domestic market • To grow relevance of India in global apparel, made-ups and textile trade 59.1 The textile industry is on the cusp of its largest ever shift in history 60.2 The shift out of China is the largest textile shift out of any single country in history. India is uniquely positioned to take advantage. $ Bn Imports into US 63.5 67.4 Imports into UK - Textile Exporters 50 45 China’s Textile export to the EU from Jan to Oct 2015 is declining by 10.6% year on year, export to Japan is dropping by 12% and export to ASEAN countries is slipping by 1.7% 40 35 8.4 10.1 1.9 2.3 30 Bangladesh Vietnam 25 20 25.5 24.6 15 China India 10 5 6.7 6.7 Share in total UK imports (2014) Share in total UK imports (2015) 0 $ Bn Imports into UK 14.2 14.0 Notable Trends In India’s Textile Sector Profile & Maturity Increasing investment in TUFS • Ministry of Textiles is encouraging investments through increasing focus on schemes such as Technology Up-gradation Fund Scheme (TUFS) and cluster development activities • TUFS for the textile sector to continue in the 12th Five Year plan with an investment target of USD24.8 billion Multi-Fibre Arrangement (MFA) • With the expiry of MFA in January 2005, cotton prices in India are now fully integrated with international rates. In 2014, the government has cleared 13 proposal of new textile parks in different states. Public-Private Partnership (PPP) • The Ministry of Textiles commenced an initiative to establish institutes under the Public- Private Partnership (PPP) model to encourage private sector participation in the development of the industry Technical textiles • Technical textiles, which has been growing at around twice the rate of textiles for clothing applications over the past few years, is now expected to post a CAGR of 20 per cent over FY11-17 • USD70.83 million has been allocated to promote the use of geotechnical textiles in the North East states. Export Potential Production Of RAW Cotton - Million Bales 45 40 35 30 25 20 15 10 5 0 39.8 28 7 30.7 8 29 30.5 9 10 33.9 35.3 35.6 11 12 13 As per budget 2016-17, the state government is aiming at setting up new textile units across the state’s cotton growing areas. Data till Oct. 2015 14 38 15 35.2 16 Maharashtra is the largest cotton producer in India with largest area under cultivation for cotton, that is, 3,827 thousand hectares during 2015-16. State Trends - Difference in Minimum Wages Min. wages are very wide across states and are high especially in key hubs Additionally differences in wages within states as well Same wage range as Bangladesh Higher Wages (>$80/mth) Maharashtra has one of the highest minimum wages in the country for textiles. Maharashtra has huge labour base, but for the viability of the new investments, it is important that much needed support is provided by giving reasonability in the cost of wages. As on date as per the minimum wages act of Maharashtra, spinning mills do not have a separate category and the minimum wages are categorized as per the residual head. The Residuary Head has one of the highest minimum wages slab owing to coverage of wide gamut of industries. Since labour requirement is huge in spinning mills and level of skill required is very easy, a separate category should be created only for spinning mills as has been done for other sectors. Asks from Central government Issue High Input Costs • MMF fiber prices >10% above international prices (e.g. Polyester) Export Subsidies • 17% VAT rebate on exports in China compared to 7.69.9% in India Asks from Central Government Scheme to promote production & export (especially synthetics) (Short Term) Innovative export rebate models (State Taxes/Cess) (Long term) Develop scheme to promote production of apparel, made-ups and textiles • Pure export incentives not WTO compliant (ex. MEIS), hence support production for both domestic and export markets • Can make scheme contingent • Setting up operations in notified & promote economic growth • Percentage of women employed in total work force • Support scheme to have more favorable terms for synthetic manufacturing Ex. Higher rebate % VAT rebate on FOB (Similar to Chinese model) • Used to set off domestic tax liability • VAT rebate to be decided after considering embedded taxes on fuel/ power under GST (1-3% of value of goods) Interim adjustment of drawback to offset high embedded taxes • ~ 1.9 – 2.9% of FOB value Asks for Cotton Processing Issue Asks from Central Government To be Part of TUF Scheme Cotton Seed Productivity & Value Exemption from APMC Special Task force Ginning/Pressing & Allied mills Cotton Branding Power cost Reduction Marketing efforts • 65% cotton seed neglected • Use of solvent technology to be encouraged • Incentives for Cotton seed Scientific Processing by upgrading TUF • Incentives for local developments • Exemption from APMC cess & Mandi Tax • Special task force be formed along with special fund allocation for sharing technical know-how with distress farmers. • Fund allocation for the purpose should be treated as CSR for the industry • Cheaper power equivalent to power loom units • Government should take initiative to brand Maharashtra cotton as sustainable. • Special investments in the area of reduction in water consumption, increasing productivity, traceability of cotton Asks for Textiles Issue Asks from Central Government Power Costs Power cost Reduction • Supply of power at competitive rates by cross subsidy surcharge waiver • Power cost reduction incentive period should be extended upto 5 years from current 3 years • This incentive should be from the date of starting of new unit • Allow textile units to be Cross Subsidy free. CETP Clearances • Faster clearance from state pollution control board • Operational & maintenance cost of ZLD is very high hence subsidizing part of it will ensure long term sustainability Water & Electric Connection Initiative Allocation & release of Subsidy funds Labor Wages • Fast track process to get water & electric connection. • Zero paperwork policy Fund allocation • Adequate funds should be allocated for release of subsidy in timely manner • Timely disbursement of incentives is a crucial factor for new & small scale industries. Changes • Maharashtra has highest minimum wages in the country for textiles. • Reasonability in the cost of wages • Separate category for spinning mills • Categorization as per Residuary head