Amendments in Gujarat Apparel Policy: Different Feather in the Cap

Gujarat has usually been a key state for the textile and clothing manufacturing business in India. One of the main reasons behind this is the investor-friendly policies in the Gujarat state. Gujarat government has usually been handle to address the industry demands. In order to accomplish the vision of farm to fashion, the Gujarat government launched a dedicated textile policy for apparel manufacturing, Gujarat Apparel Policy 2017.

The policy has fared properly since its release and the state has witnessed significant interest from investors. However, during the policy implementation, the investors faced issues in certain areas of the policy and as a result. The government has introduced specific amendments to the policy. It is unnecessary to point out that the amendments have made the policy more investor-friendly.

The key amendments are as follows on Gujarat Apparel Policy:

• Eligibility standards under the Gujarat Apparel policy have been decreased to investment in 75 machines & employment generation for 150 workers, which was earlier 150 machines and 300 workers.
• Multiple expansions allow availing incentives under the policy that was previously limited to only one expansion.
• Benefits in line with plug & play have been prolonged directly to investors with 50% assistance in the construction of building & shed (excluding land cost) up to Rs. 10 crores per entity. The maximum eligible region per machine will be 150 Square feet.
• Provision of Ramp-up duration of 6 months has been introduced to applicants to make sure the industry gets the maximum advantage of payroll assistance under the policy.
• Investment in value-addition activities in clothing (Washing & Garment processing) has been allowed for interest subsidy under captive production.

It is expected that the above amendments will assist in attracting more investors. And extend the advantages to smaller businesses and budding entrepreneurs. Some of the significant advantages that the industry can enjoy at the helm of recent amendments are as follows:

• The reduction in the eligibility standards reduced to 75 machines and 150 workers will enable a lot of MSME investors to enlarge and set-up new units under the policy for which they were earlier ineligible.
• The provision of various expansions with decreased eligibility will ease out the enforcement of garment investors to set-up large units and recruit the staff at once. The amended apparel policy gives liberty to set-up a factory with limited capacities and later enlarge the capacity in a phase-wise manner through various expansions.
• Gujarat being the denim state of India has an excess of denim garment manufacturers. Manufacturing denim clothes requires a lot of processing such as washing, dyeing, and other value-adding processes. The amendment of including the value-added procedure for interest subsidy will incentivize denim manufacturers to set up a composite unit with washing, dyeing, etc.
• The extension of plug & play advantages directly to garment investors that was earlier through GIDC will not only minimize the time taken inland identification, tendering, construction and project begin but will also provide freedom and flexibility to the investors in determining the project location as per investor’s assessment. Further, as per the earlier Gujarat Apparel policy, the state government provided incentives of up to 125-130% (over a duration of 5 years) of the whole capital invested. With this amendment, the returns will expand even further.
• A lot of investors shared their problem in the past that they might not be able to attain the promised level of employment within the stipulated time. Hence might lose the employment generation assistance. Hence, the provision of a ramp-up duration of 6 months will allow such manufacturers to fulfill the condition of employment generation without any fear of losing out on the incentives.

The recent amendments under the Gujarat Apparel policy seem promising for the future of the garment business in Gujarat as the government is trying to build a business ecosystem as well as provide subsidies in line with that provided by other lucrative investment destinations. The current amendments made under the policy not only highlight the commitment of the state closer to building a sustainable industry but also boosts the self-belief of investors at the time of a financial slow-down. In conclusion, the government has made a more aggressive stance wooing the garment business to Gujarat and is expected to garner good-sized investments.