Transcript Textile Presentation 1.3 - Vidarbha Industries Association

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