TAMIL NADU POLICY TECHNICAL TEXTILES APPAREL MANUFACTURING NATIONAL
DELHI, INDIA
By IFAB MEDIA - NEWS BUREAU - June 16, 2023 | 703 20 minutes read
The state of Tamil Nadu, with Chennai as its capital, comprises 38 districts and spans an area of 1.3 lakh square kilometers. It has a population of 7.68 crores, with a literacy rate of 80%. Within the state, three prominent seaports are located, namely Chennai, Ennore, and Tuticorin. There are four international airports situated in Chennai, Madurai, Coimbatore, and Tiruchappalli.
By Chandra Deep Mishra, Consultant, Wazir Advisors
Tamil Nadu showcases a robust economy with a total GDP of US$ 354 billion and a growth rate of 14%. The state is home to more than 80 Global Fortune 500 companies and leading conglomerates. (Ministry of Finance, 2023 & Investing in Tamil Nadu).
Contributing approximately 4% to the national GDP and employing around 31 lakh individuals, Tamil Nadu accounts for a 19% of the total textiles output in the country. With 40% of India's total yarn exports, this state stands as the number one producer of cotton yarn and holds the top position in cotton yarn exports within the country. The state encompasses one third of the textile business in India and has emerged as the third-largest recipient of foreign direct investment (FDI) (in 2022) in the textile sector. Nearly three-quarters of power loom products are earmarked for both direct and indirect exports. Tamil Nadu is home to approximately 50% of all garment units in India. (Investing in Tamil Nadu)
Special Scheme for Technical Textiles, MMF Yarn from Recycled Products, MMF Fabric & Apparel Manufacturing in Tamil Nadu
In March 2023, the government of Tamil Nadu introduced a special scheme aimed at providing additional advantages and subsidies to manufacturing units involved in the production of man-made fibre (MMF) yarn, MMF fabric from recycled materials, technical textiles, and apparel manufacturing within the state. This scheme expands upon the benefits previously provided by the Tamil Nadu Industrial Policy 2021 and encompasses both new and expansion projects in district categories A, B and C.
DISTRICT CATEGORIES
|
District Category |
Name of the Districts |
|
A – 4 Districts |
Chengalpattu, Chennai, Kancheepuram and Tiruvallur |
|
B – 12 Districts |
Coimbatore, Erode, Karur, Krishnagiri, Namakkal, The Nilgiris, Ranipet, Salem, Tiruchirappalli, Tirupattur, Tiruppur, and Vellore |
|
C – 22 Districts |
Ariyalur, Cuddalore, Dharmapuri, Dindigul, Kallakurichi, Kanniyakumari, Madurai, Mayiladuthurai, Nagapattinam, Perambulur, Pudukkottai, Ramanathapuram, Sivagangai, Tenkasi, Thanjavur, Theni, Thiruvarur, Thoothukudi, Tirunelveli, Tiruvannamalai, Villupuram and Virudhunagar |
As an eligibility criteria, new projects, or expansions in technical textiles, MMF yarn from recycled materials, and MMF fabric must adhere to a minimum investment requirement of Rs. 50 crores, Rs. 50 crores, and Rs. 100 crores, respectively, for a period of four years. An apparel manufacturing unit will be eligible with a minimum investment of Rs. 100 crores and minimum employment of 2,000 jobs for a standard investment period of 4 years.
Fiscal Incentives Offered Under the Policy
A brief summary of various fiscal incentives offered to new manufacturing units in technical textiles, MMF yarn from recycled materials & MMF Fabric in the state is mentioned below.
Incentives for new/expansion projects in technical Textiles, MMF Yarn from recycled materials & MMF Fabric and apparel manufacturing
|
Sr. No. |
Type |
Description |
|
1. |
Investment Promotion Subsidy# |
Only can be availed from the below – Special capital subsidy: 15% of Eligible Fixed Assets (EFA) disbursed in equal annual instalments over 10 years Turnover based subsidy: This shall be applicable as a percentage of the Turnover in Eligible Products in each financial year for a period of 10 years. (Refer the policy document for more details) |
|
2. |
Training Subsidy |
Rs. 6000/worker/month for women & transgender employees, persons with disabilities, persons from SC or ST communities and Rs. 4,000/worker/month for all others for 6 months and if resident of Tamil Nadu |
|
3. |
Land Subsidy* |
10% concessional rate for “A” & “B” category districts and at a 50% concessional rate in “C” Districts in parks promoted by SIPCOT, up to 20% of EFA |
|
4. |
Electricity Tax Subsidy |
Electricity tax exemption for a period of 5 years |
|
5. |
Stamp Duty Subsidy## |
100% concession |
|
6. |
Green Industry Subsidy |
25% subsidy on the cost of setting up environmental protection infrastructure upto Rs. 1 crore |
|
7. |
Enhanced Quality Certification Subsidy |
Reimbursement of 50% of the total cost incurred for obtaining certifications limited to Rs. 1 crore |
|
8. |
Enhanced Intellectual Property Creation Subsidy |
Reimbursement of 50% of the expenditure incurred upto Rs. 1 crore. |
|
9. |
Interest Subsidy |
5% as a rebate in the rate of interest for 6 years with investment range and annual cap as mentioned below: o Rs. 50 to 150 crores – Rs. 10 lakhs per annum o Rs. 150 to 300 crores – Rs. 15 lakhs per annum |
*For private lands in “C” districts, 50% subsidy upto 50 acres, subject to land cost not exceeding 20% of EFA and a cap of Rs. 2 crores provided that at least 70% of the land is used for manufacturing operations.
#In case of apparel manufacturing unit, only turnover-based subsidy is applicable for units in “B” & “C” district category
##In case of apparel manufacturing unit, 50% in “B” and 100% concession in “C” category districts
For any unit diversifying in the eligible area of production, only capital, training, and interest subsidy will be applicable. The scheme also has capital, marketing, traceability, and design skilling incentives for setting up a common facility centre(s) in the state.
Estimation of Quantum of Incentives Available for a Garment Factory
To understand the quantum of incentives that are being offered by the state of Tamil Nadu, let us consider the following project for setting up a sewing factory:
- Number of machines: 1,000
- Land required: 7 acres (300 sq. ft./machine)
- Total investment: Rs. 50 crores (Rs. 5 lakhs/machine)
- Eligible Fixed Assets: Rs. 33 crores (2/3rd of total investment)
- Labor required: 2,000 (2 nos./machine)
For this project, the entitlement under various subsidies is given in table 1.
|
Category |
Total Subsidy (in Rs. Crores) |
|
Training Subsidy (Rs. 4,000 per male & Rs. 6,000 per female for 6 months) |
5.94 |
|
Land Subsidy (50% concession rates) |
3.15 |
|
Green Industry Subsidy (25% on the cost of infrastructure) |
1.00 |
|
Capital Subsidy (2.5% of investment in EFA) |
0.83 |
|
Interest Subsidy (5% rebate in interest for 6 years) |
0.80 |
|
Electricity Tax Subsidy (100% exemption for 5 years) |
0.26 |
|
Total |
11.98 |
The manufacturer may claim a total subsidy of ~Rs. 12 crores which is around 25% of the total investment.
In conclusion, the policy represents clear progress towards advancing investment and employment opportunities in the state. Given the capital- and labor-intensive nature of the technical textile and apparel industry, this sector is poised to receive substantial support through these incentives.
 |
Chandra Deep Mishra, Consultant, Wazir Advisors Chandra is a textile engineer with Masters in Fashion Technology from the National institute of Fashion Technology (NIFT). He has two years of practical experience in textile and garment manufacturing as well as in merchandising. Prior to joining Wazir, Chandra was associated with leading textile and garment manufacturing companies. Some of the representative's work includes:
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Wazir Advisors Over the years, Wazir has placed itself as a premier Indian consulting organization with a special focus on textile and apparel value chain. Their team of textile engineers, sector experts, management graduates and economists, have executed a broad range of consulting projects working for reputed Indian and international clients. Wazir has partnered with ITA Germany, an international research institute under RWTH University, Aachen, for offering sustainability and digitalization solutions to textile and apparel players in India and other South Asian countries. With combined expertise, Wazir- ITA can be your solution provider in the shift towards a sustainable future.
