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The textile industry, being one of the most significant sectors in the Indian economy, has been a key focus area for the Government of India. A number of policies have been put in place to make the industry more competitive.
- The Technology Upgradation Fund Scheme (TUFS)
Recognising that technology is the key to being competitive in the global market, the Government of India established the Technology Upgradation Fund Scheme (TUFS) to enable firms to access low-interest loans for technology upgradation. Under this scheme, the Government reimburses 5 per cent of the interest rates charged by the banks and financial institutions, thereby ensuring credit availability for upgradation of the technology at global rates. This scheme was launched on April 1, 1999. TUF Scheme has been continued during the Eleventh Plan (2007-2012). Handlooms will now be covered under the TUF scheme.
- Integrated Textile Parks Scheme
Manufacturing is a thrust area for the government. Foreign companies are perceived more as partners in building domestic manufacturing capabilities rather than a threat to Indian businesses. Following this through, Schemes such as, Schemes for Integrated Textile and Apparel Parks have been executed. Under the Scheme for Integrated Textiles Parks (SITP), 26 parks have been approved so far out of 30 sanctioned.
- Scheme for Handlooms
For Handlooms a cluster approach for the development of the handloom sector was introduced in 2005-06 and 120 clusters were selected. 273 new yarn depots are opened up till now and the Handloom Mark was launched.
- Health Insurance Scheme
The Health Insurance Scheme has so far covered 3,00,000 weavers and will be extended to more weavers. The scheme will also be enlarged to include ancillary workers.
- Textilpolis
To bring together the efforts of the different export promotion councils (EPCs), Government of India has decided to set up a textile hub called ‘Textilpolis’ that would also integrate and make policies for the entire textile value chain. Textilpolis would act as trade facilitation center for Indian image branding, and R&D. The objective is for setting up exhibition and seller interaction center and common data resource center which inter-alia includes export infrastructure and marketing infrastructure, like global procurement center, international merchandise center, single window center for regulatory services, center for brand administration, and fashion development.
Quality Improvement
The Textile Commission, under the Ministry of Textiles, facilitates firms in the industry to improve their quality levels and also get recognised quality certifications. Out of 250 textile companies that have been taken up by the Commission, 136 are certified ISO 9001. The other two certifications that have been targeted by the Textile Commission are ISO 14000 Environmental Management Standards and SA 8000 Code of Conduct Management Standards.
Foreign Direct Investment (FDI) Policy
100% FDI is allowed in the textile sector under the automatic route. FDI in sectors to the extent permitted under automatic route does not require any prior approval either by the Government of India or Reserve Bank of India (RBI). The investors are only required to notify the Regional Office concerned of RBI within 30 days of receipt of in word remittance. Ministry of Textiles has set up FDI Cell to attract FDI in the textile sector in the country.
The FDI cell will operate with the following objectives:
- To provide assistance and advisory support (including liaison with other organizations and State Governments)
- Assist foreign companies in finding out joint venture partners
- To sort out operational problems
- Maintenance and monitoring of data pertaining to domestic textile production and foreign investment
Foreign Investment Scenario
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Participants