Karnataka’s foray into the textile sector has turned out to be quite a successful venture. So much so that Bangalore has earned itself the moniker of the ‘garment capital of India’. With the textile industry occupying a key position in the economy of Karnataka, the state government is working towards leveraging the potential for growth of the textile sector in the state. Let us know in detail about the textile industry of Karnataka and its prospects for growth.
Position of Karnataka’s textile industry at the national level
Karnataka’s textile industry contributes to 20% of the garment production taking place in the country, which is valued at USD 1.56 billion. The state is responsible for 8% of the national exports in the textile sector. 35% of the country’s raw silk production takes place in Karnataka. The silk exports of Karnataka account for 24% of the silk goods export value at the national level. The state also contributes to 11% of the country’s total wool production. 6% of the cotton produced in the country comes from Karnataka.
Karnataka ranks at the second position in garment exports when the value of the exports is considered. The present garment export of Karnataka is estimated to be around Rs. 4000 crores. This figure is 15% of the state’s overall exports. The contribution of Karnataka’s textile industry in terms of industrial production, export earnings, and employment generation has consolidated its position as a key player in the economy of the state.
Key factors influencing the growth of the textile industry in Karnataka
The graph for the growth of the textile industry in Karnataka is on an upward incline. There are certain factors that are providing the impetus for the industry’s growth in the state. Some of the major factors are:
- The presence of skilled manpower in the state in the form of 55000 weaver families possessing handlooms
- The state has 168 private training centres and 144 skill development centres that cater to the textile sector
- Karnataka has more than one million power looms to meet the requirements of the textile industry
- There are 7 textile parks in the state that are a big driving force for the industry’s growth in the state
- 24 Integrated apparel and textile clusters are located across the state
- A Textile SEZ Park extending over 233 hectares has been developed at Hassan
- The state has around 386,000 manufacturing units in the textile industry that are engaged at the unorganized and the organized level
- International brands like Tommy Hilfiger, Allen Solly, Nike, Adidas, etc. treat the state as their sourcing hub.
- There is abundance of raw materials and resources for the growth of the textile industry in the state
- More than 4,32,000 people are engaged in sericulture in the state, which provides the silk needed for producing various garments and for export purpose as well
- The state has 10 silk exchanges and 66 cocoon markets that help in the silk trade
- Since Karnataka is among the top cotton producing states in India, the textile industry in the state draws benefit from this factor as well
- The huge amount of wool produced in the state also aids in the industry’s growth
Policies and initiatives by the state government
The Karnataka Government is keen to witness the growth of the textile industry in the state. The government has undertaken many initiatives to motivate textile entrepreneurs to establish textile enterprises in the state. The new textile policy named Nuthana Javali Neethi 2013-18 highlights the government’s vision and objectives regarding the development of the textile industry. Among the policy measures and initiatives of the state government are the following:
- Categorization of the state into three zones under the new textile policy so as to strengthen the textile sector in the state
- Zone 1 includes the backward districts having the potential for textile related activities. These areas are to derive maximum benefits.
- Zone 2 includes those areas that are known to have very less textile activities. These areas are to receive marginally lesser benefits as compared to the Zone 1 areas.
- Zone 3 includes all areas that come under the Bangalore urban district, except Ankeal taluk. But they are not entitled to any benefits under the new textile policy.
- Providing assistance for sustainable development of all segments related to the textile industry
- Taking measures to remove obstructions for exports
- Facilitating the flow of trained and skilled manpower to the textile industry
- Proposal to open apparel parks at various locations across the state for the overall development of the textile sector
- Improvement of infrastructural facilities like land, water, road, power, telecommunication, etc. for the garment and textile sector
- Setting up of several private industrial estates for the textile sector
- Proposal to establish a single window clearance agency to cater to the investment needs of organizations and companies interested in investing in the state’s textile sector
Investment opportunities for textile industry in Karnataka
The state government intends to encourage entrepreneurship and attract investments worth around Rs. 100 billion for the textile and garment industry. The government also aims to create at least 50000 jobs in the textile sector. The government has decided to offer various incentives and concessions to invite investments for establishing more specific textile zones and developing cluster parks. The following are some of the points that showcase Karnataka as an investment destination for the textile sector:
- Incentives for development of Common Effluent Treatment Plan (CETP), Green Field Textile Parks, and Brown Field Textile Parks, based on the zonal classification as per the new textile policy
- Proposal to provide reimbursement for design development, branding and market development, and product diversification in specific textile zones in backward areas
- Credit linked capital subsidy
- Power subsidy
- ESI/ EPF reimbursement
- Stamp duty and entry tax reimbursement
- Interest subsidy for small and medium investors for projects of up to Rs. 990 million
- Units involving investments of Rs. 100 million to Rs. 990 million are entitled to receive credit linked capital subsidy in the range of 15% to 20%, with an upper limit cap of Rs. 60 million
- Micro, small, and medium enterprises (MSMEs) investing up to Rs. 100 million will also receive credit linked capital subsidy in the range of 15% to 20%, but the upper limit cap will be of Rs. 20 million
- Entrepreneurs belonging to various categories such as Scheduled Tribes and Scheduled Castes, women, ex-servicemen, physically challenged, and minorities are entitled to receive additional subsidy
- Integrated textile units are to benefit from a special credit linked capital subsidy plan
- Existing units are entitled to receive a subsidy of 15% to 20% with an upper limit cap of Rs. 10 million for modernization of their units
- Cooperative spinning mills are entitled to receive a subsidy of 20% with an upper limit cap of Rs. 20 million for the purpose of revival and upgradation of their units
- Development of apparel and textile parks across various locations like Bangalore, Gulbarga, Davangere, Bellary
- Identification of Doddaballapur, Tumakuru, and Kalburgi as potential zones for development of textile parks
The textile industry of Karnataka is full of potential for further growth and development. The CAGR growth rate of India’s textiles and apparel exports in the next 5 years is expected to be at 10%. Karnataka stands a good chance to strengthen its position as a key player for textile exports at the global level. Considering the new textile policy and the investment opportunities provided by the state government, the textile industry in the state can be expected to continue with its winning graph on the growth chart.
Other industries in Karnataka