Continuously growing, Bhilwara fetches huge investments but fails to attract new players

Rajasthan’s Bhilwara, the city of entrepreneurs, is globally known for a variety of fabrics like PV, denim, cotton shirting. As of now producing 800 million metres of synthetic and 160 million metres of cotton fabric per year, the city is a self-sufficient hub for PV fabrics. Right from fibre, yarn, weaving to processing, this textile hub is well equipped and there is never a dearth of business as it offers cost-effective as well as premium products, which cater to domestic as well as overseas markets. Around 1000 units are there which totally have an annual turnover of Rs. 25,000 crore.

The hub is also known for resilience, growth, expansion and diversification of its textile entrepreneurs as once only known for polyester fabrics, the city over a period also started offering knitted fabric, denim fabric, silk and so on. The development of the textile industry in Bhilwara has been a continuous process with an average annual growth rate of 8 to 10 per cent till 2018, exporting synthetic yarn, woollen products, cotton yarn and fabrics, when slowdown in the textile industry hit production across the country.

When Apparel Resources (AR) last visited the city and interacted with the leading players about a decade ago, few important directions were highlighted. The most critical being the investment in latest technology for spinning and weaving. If experts are to be believed, then the rate of modernisation of looms at Bhilwara is very high compared to the country. The city is home to more than 20 modern technology process houses with a capacity of about Rs.80 crore metres per annum.

Now, the textile industry in the city is geared up to grow further as recently some leading players announced major investments in this city like BSL Ltd. announced an investment of Rs. 150 crore, and similarly, Sangam India said that it will be investing Rs. 1,521 crore. There are a few other such names like Lagnam Spintex and Sudiva Spinners which are also investing here.

Being an established and growing hub, the city has a complete ecosystem to attract fresh investment which is one of the major reasons that the above-mentioned companies, firmly rooted in Bhilwara, continue investing here. As these companies already have operations in Bhilwara, they are equipped with established trained teams and infrastructure and this made the most sense for us. These companies have chosen Bhilwara for fresh and huge investment due to several reasons including better administration support. Over and above, the economy of scale and their existing seamless operations model will add to their profitability in times to come. Moreover, Bhilwara is a preferred destination because of its peaceful environment, beneficial ecosystem with trained manpower and an established market scenario. But at the same time no major player, not having base in Bhilwara or Rajasthan, is investing here.

Dr. S N Modani, MD & CEO, Sangam India Ltd says, “Bhilwara is the centre for poly viscose dyed yarn market and since we are already situated there, we would want to take advantage of the location. As the market will grow, we are aiming to be a part of it. At Bhilwara, the entire ecosystem is well set. Therefore, it has motivated us to further invest in the city, in four major locations such as Atoon,Biliya, Sareri and Soniyana.” The company’s one project will mostly be on a brownfield and the other on a greenfield.

The important question here is that when many companies that have deep roots are investing in the city, why no player from outside is investing in the hub.

Regarding, subsidies and incentives being offered by the Rajasthan Government, it is pertinent to mention that the State Government has come up with the Rajasthan Investment Promotion Scheme 2019 (RIPS) where it is giving inter-subsidies and since the project is of a mega nature, a special package will be provided to such companies. The companies are also negotiating with the Government to explore additional possible exemptions apart from the inter-subsidies that are available for 7 years at 6 per cent.

“We will discuss this with them on a case-to-case basis. So basically, it will also help to improve the profitability of the company in the long run as far as the new investments are concerned,” says Dr. S N Modani.

It is not that Rajasthan is not offering incentives or subsidies to the investors or the state is lacking on any other front. With regard to overall infrastructure, the state has India’s biggest infrastructure project – the Delhi-Mumbai Industrial Corridor (DMIC) is taking shape 150 km on both sides of the Western Dedicated Freight Corridor. The new MSME Act was passed by the Government. While more than 100 permissions were required from over 25 departments to start an industry, the state formulated rules where no permission for any industries for three years would be required. The state has topped in installed capacity of solar energy in India with 7737.95 mW. The state has identified textiles as one of the core areas.

Mahendra Jain Executive Officer of Mewar Chamber of Commerce and Industry says, “In last two decades, only Baddi (Himachal Pradesh) has emerged as a big textile hub where companies have invested in spinning and weaving. The textiles companies wish to invest where they have already a strong base, unlike the garment factories which have invested in new areas mainly where they get labour.” He further added that as every hub has its own specific products, so new investment is also preferred in the hubs where those kinds of products are already being produced.

Rahul Dev Singh, GM, District Industries Centre (DIC), Bhilwara, who was also instrumental in the recently organised ‘Invest Bhilwara’ (the first district-level investment summit of the Rajasthan) told AR, “One of the main reasons that Bhilwara is in the dark zone is from water availability point of view, so prospective investment in denim, dyeing and processing are issues. The solution of this issue is resurvey of land especially of the pockets where water availability is not a major issue.”

The State Government is attracting investors from other states through roadshows and by approaching various groups. “We are in touch with some investors and hopefully, they will invest here. We are coming up with an incubation centre for garment manufacturing and technical textile. It will be also be helpful for prospective investors. As we have more than 1,000 hectares of land, we are hopeful to get MITRA Park and it will also attract the investors,” said Rahul.

“The new players will surely come in soon because everyone is evaluating the incentives made available by the other State Governments as well. The market has to grow and the China one plus factor will also boost the export from India and Bhilwara is all set for that. The entrepreneurs in Bhilwara have excellent knowledge of projects and they will capitalise on that. So, I think Bhilwara provides better opportunities for investors, especially in the textile market, making it a preferred investment destination,” concludes Dr. SN Modani.