Karnataka, one of the leading Indian states in apparel manufacturing with hubs like Bengaluru, has come up with its New Textile & Garment Policy 2019-2024.
The state aims to attract Rs. 10,000 crore investment in next 5 years and create over 5 lakh job opportunities. But will it be able to?
Looking at market conditions, the target seems one difficult task to achieve.
Contributing 20 per cent in India’s garment production, the state needs the budget requirement of around Rs. 1,500 crore to execute this policy.
The State Government claims that the new policy provides for capacity building and vendor development, and envisages creation of centres of excellence for textiles/technical textiles.
The policy has divided the state into 4 various zones and it has credit linked capital subsidy for MSMEs and large enterprises, interest subsidy for large enterprises and power subsidy for MSMEs and large enterprises.
There is a special package for mega textile units that have fixed investments of over Rs. 300 crore and minimum employment of 350; and for apparel units with fixed investments of over Rs. 200 crore and minimum employment of 3,000 people.
Though fine print of the policy is not available in the public domain, but looking at recent report of CAG and overall market conditions, there is scepticism whether the State Government will be able to achieve this target or not.
International market conditions are not in the favour of Indian apparel exporters as majority of them are struggling to survive. Very few of them are expanding. And for those that are expanding, emerging or other states remain their first priorities.
Some of the top apparel manufacturers having their strong manufacturing base in Bengaluru or Karnataka earlier, have started factories in Odisha, Jharkhand, Andhra Pradesh and Telangana.
Recently, the Comptroller and Auditor General of India (CAG) commented that the Karnataka Textile Policy 2013-18 failed to achieve its intended investment and job generation targets.
CAG has said in its economic social report for March ended 2018 that the Rs. 10,000-crore investment target and 5 lakh employment generation target envisaged in the policy were not achieved and shortfall was to the extent of 63 per cent and 76 per cent, respectively.
It is pertinent to mention here that Karnataka was the first Indian state to launch State Textile Policy known as ‘Nuthana Javali Neethi 2013-18’.