Project Profile: Integrated Textile Park at Tilda, Raipur (Chhattisgarh)

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1 Project Profile: Integrated Textile Park at Tilda, Raipur (Chhattisgarh) Introduction India is the one of the world's largest producers of textiles and garments. Abundant availability of raw materials such as cotton, wool, silk and jute as well as skilled workforce have made the country a sourcing hub. It is the world's second largest producer of textiles and garments. The Indian textiles industry accounts for about 24 per cent of the world's spindle capacity and eight per cent of global rotor capacity. Value Chain: Global Value chain for textile industry is as follows: Figure 1: Global Textile Industry Value Chain Textile and apparel value chain is affected by purchasers; creating finished products must go through many stages and production activities are often carried out in many countries. In particular, wellknown manufacturers, big wholesalers and retailers play key roles in establishing production networks and shaping mass consumption through a series of strong brands and outsourcing activities to satisfy this demand. Global textile and apparel value chain is divided into 5 basic stages: 1) Supply of raw materials, including natural cotton, thread, etc; 2) Production of intermediate goods; products of this stage are fibers, fabrics provided by weaving, knitting and dyeing companies; 3) Design and manufacture finished products implemented by garment companies; 4) Export by commercial intermediaries; 5) Marketing and distribution Supply chain of Indian Apparel market Cotton textiles continue to form the predominant base of the Indian textile industry, though other types of fabric have gained share in recent years. In , the share of cotton and manmade fabric was 60% and 27% respectively. Cotton fabrics accounted for 46% of the total fabric produced in , while man-made fibres held a share of 41%.

2 Figure 2: Indian Apparel market supply chain The fibre and yarn-specific configuration of the textile industry includes almost all types of textile fibres, encompassing natural fibres such as cotton, jute, silk and wool; synthetic / man-made fibres such as polyester, viscose, nylon, acrylic and polypropylene (PP) as well as multiple blends of such fibres and filament yarns such as partially oriented yarn (POY). The type of yarn used is dictated by the end product being manufactured. The Man-made textile industry comprises fibre and filament yarn manufacturing units of cellulosic and non-cellulosic origin. The cellulosic fibre/yarn industry is under the administrative control of the Ministry of Textiles, while the non-cellulosic industry is under the administrative control of the Ministry of Chemicals and Fertilisers. It is well-established that India possesses a natural advantage in terms of raw material availability. India is the largest producer of jute, the second-largest producer of silk, the third-largest producer of cotton and cellulosic fibre/yarn, and fifth-largest producer of synthetic fibres/yarn.

3 The industry structure is fully vertically integrated across the value chain, extending from fibre to fabric to garments. At the same time, it is a highly fragmented sector, and comprises small-scale, nonintegrated spinning, weaving, finishing, and apparel-making enterprises. The unorganised sector forms the bulk of the industry, comprising handlooms, power looms, hosiery and knitting, and also readymade garments, khadi and carpet manufacturing units. The organised mill sector consists of spinning mills involved only in spinning activities and composite mills where spinning, weaving and processing activities are carried out under a single roof. Market Scenario Global Scenario The current global apparel market is estimated at US$1,100bn with trade value of US$700bn. EU is the largest consumer market, reaching US$350bn per annum, whilst China is the largest exporter with US$288bn. Leading countries such as U.S, EU and Japan focus solely on highest-value stages of textile and apparel value chain, that are designing, marketing and distribution. Meanwhile, manufacturing activities are concentrated in China, India and other developing countries such as Bangladesh, Vietnam, Pakistan, Indonesia, etc. The connection between manufacturers and the endusers created by traders from Hong Kong, South Korea and Taiwan is a unique trait of global textile and apparel sector. Figure 3: Scale of Global Apparel Industry (USD billion) Source: Wazir Advisors Scale of the world apparel market in 2012 reached US$1,105bn, accounting for 1.8% of global GDP. It is forecast to reach US$2,110bn by 2025, equivalent to CAGR at about 5% per year for the period of main consumer markets are the EU-27, U.S, China and Japan; with a population of only about one third of the global population, these markets account for over 75% of global apparel value. EU-27 is currently the largest market with a value of US$350bn per year. However, China is forecast to become the largest market by 2025 with a value of US$540bn, equivalent to CAGR of 10% per year for the period of Brazil, India, Russia, Canada and Australia are also the largest markets on the list. Indian market is forecast to have the highest growth rate with CAGR of 12% per year and value of US$200bn by 2025, thus, India will surpass Japan and Brazil to become the country

4 with the 4th largest scale in the world. Other countries account for about 44% of the world population but only about 7% of global apparel market. Global textile and apparel value chain is expected to attract investment worth US$350bn over the period of Indian Scenario Textile and Apparel industry is one of the most important sectors in Indian manufacturing sector contributing around 5% of Indian GDP. It is also one of the largest contributing sectors of India s exports contributing 11 per cent to the country s total exports basket. The textile industry is labour intensive and is one of the largest employers. The textile industry has two broad segments, namely handloom, handicrafts, sericulture, power looms in the unorganised sector and spinning, apparel, garmenting, made ups in the organised sector. The Indian textiles industry is extremely varied, with a hand-spun and hand-woven sector at one end of the spectrum, and the capital intensive sophisticated mill sector at the other. The decentralised power looms/ hosiery and knitting sector form the largest and knitting sector form the largest section of the Textiles Sector. The Indian textiles industry, currently estimated at around US $108 billion, is expected to reach US $ 141 billion by The industry is the second largest employer after agriculture, providing direct employment to over 45 million and 60 million people indirectly. Indian Textile Market in 2012 Domestic Textile & Apparel Market Export 35% Domestic 65% Apparel 69% Technical Textile 24% Home Textile 7% Source: IBEF, Min. of Textiles In 2012, apparel had a share of 69 per cent of the overall market; textiles contributed the remaining 31 per cent. Government has established 75 apparel training and design centres across India to improve technical skills in apparel industry government. Government has also approved Apparel park for exports at 12 locations to promote apparel exports.

5 India's Textile Export Share for % 4% 3% 17% 39% Readymade Garment Cotton Textiles Man-made Textiles Handicrafts Silk & Handloom Woolen & Others 34% Source: IBEF Readymade garments was the largest contributor to total Shares in India s textile exports (FY12P) with a share of 39 per cent Cotton and man-made textiles were the major contributors with shares of 34 per cent and 17 per cent, respectively. Textile and apparel sector has been growing to increased penetration of organised retail, favourable demographics and rising income level to drive textile demand. India has abundant availability of raw materials for this industry such as cotton, wool, silk and jute. Textile industry is also supported by policies like 100% FDI through automatic route and Scheme for Integrated Textile Park (SITP) to facilitate setting up of textile parks with world class infrastructure facilities. The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted foreign direct investment (FDI) worth Rs 6,710.94crore (US$ 1.11 billion) during April 2000 to February Chhattisgarh Scenario The State of Chhattisgarh has emerged as a lucrative investment hub among its competing states with sectors like power, mining and minerals, manufacturing, sponge iron and steel, IT and ITeS, biotechnology, food processing etc. becoming key investment drivers and has attracted both domestic and foreign investment over the past few years. The investment flow into the State has increased significantly in the past five years. Chhattisgarh attracted foreign direct investments in power, manufacturing, services, mining and construction sector. The State is steadily garnering support from the investors, transforming it to a manufacturing and power hub of the country. While the State administration is based in Raipur, a new capital for Chhattisgarh at Naya Raipur has been developed. Chhattisgarh in its industrial policy has declared textile as priority sector. Chhattisgarh is one of the premier states in production of tassar cocoons, yarn and fabrics. Silk products from state are famous for its quality and have good demand in country as well as international markets.

6 Chhattisgarh state industrial corporation (CSIDC) is planning to set up an integrated textile park in Village Khupri in Tilda, Raipur. CSIDC has identified a land parcel of 32 hectares for this project. Project is being planned as per Scheme of Integrated Textile Park (SITP) of Ministry of Textiles, GoI. The project The proposed Textile park at Tilda is aimed at providing one stop integrated facilities with manufacturing support, welfare and common infrastructure facilities to the prospective textile industries. The proposed textile park is envisaged to house world class eco system for textile industry. Project site CSIDC has identified a land parcel admeasuring 32 hectares at Village Khapri, Tehsil Tilda, District Raipur, Chhattisgarh for the development of the proposed Textile Park. Project will be established on land parcel of 32 hectares in Village Khapri in Tehsil Tilda of District Raipur. The layout of the site is set out in the exhibit below. Project site Proposed infrastructure in park: The proposed textile park will consist of core facilities to be supported by common infrastructure facilities and support infrastructure facilities. The details of the proposed infrastructure facilities are provided in the table below. Common Infrastructure Support Infrastructure Core Facilities Facilities Testing laboratory(including equipment) Design centre (Including equipment) Training Centre Trade & display centre Conferencing and Meeting Facilities Warehouse/ raw material depot Boundary wall Roads Electricity supply Common Solid Waste Management & Disposal System Treated Water Supply System Storm Water Management Rain water Harvesting Common Effluent Open Plots Multi-tenanted factory space

7 Common Infrastructure Facilities Packaging unit Canteen/worker hostels Recreation centre Support Infrastructure Treatment Plant Street Lights Core Facilities The proposed activities have been so chosen so that this Project proves to be a one stop solution for Textile manufacturing units. Proposed activities in park: Following activities of proposed in Textile Park: Ginning & Pressing Spinning Mill Weaving Processing Knitting Garmenting Proposed cost: Project cost of the proposed Integrated Textile Park is approx. INR 110 crores. Project structuring: The project is envisaged to be developed under the Scheme of Integrated Textile Park set out by Ministry of Textile, Government of India. Implementation of scheme will be through a Special Purpose Vehicle (SPV) which will carry out the business of developing, operating and maintaining the infrastructure, amenities and other common facilities created in Textile Park. The structuring for the proposed SITP at Tilda is as set out below:

8 As demonstrated in the figure above, CSIDC will be the JV Promoter, forming a SPV with at least 8 promoters, out of which minimum 3 should be in textile manufacturing, and other investors, Wherein, CSIDC cannot hold more than 49% of the equity. Interventions from Government of Chhattisgarh Chhattisgarh has identified Textile Manufacturing as a Priority Sector in State s Industrial Policy Definition of medium, large and mega projects for Textile sector is as follows. Medium industry Large industry Mega industry Investment in plant and machinery is upto INR 10 crores Investment in plant and machinery is between INR 10 crores and INR 50 crores Investment in plant and machinery is between INR 50 crores and INR 100 crores Some of the key incentives/ subsidies available under the policy to units in Priority Sector are: Interest subsidy For Medium and Large Industries: developing backward 50% of the total interest paid up to 5 years - maximum limit Rs. 20 lakh p.a. 60% of the total interest paid up to 7 years - maximum limit Rs. 40 lakh p.a. For Mega Industries: developing backward 50% of the total interest paid up to 6 years - maximum limit Rs. 60 lakh p.a. 70% of the total interest paid up to 8 years - maximum limit Rs. 100 lakh p.a. Fixed Capital Investment subsidy Medium Scale Industry developing backward 35% of the fixed capital investment - maximum limit is Rs. 70 lakh or Limited up to 70% of the fixed capital investment, maximum time period 6 years, whichever ends first 45% of the fixed capital investment - maximum limit is Rs. 100 lakh or Limited up to 80% of the fixed capital investment, maximum time period 7 years, whichever ends first Large Scale Industry developing 35% of the fixed capital investment - maximum limit is Rs. 110 lakh or Limited up to 90% of the fixed capital investment, maximum time period 8 years, whichever ends first

9 backward 45% of the fixed capital investment - maximum limit is Rs. 120 lakh or Limited up to 100% of the fixed capital investment, maximum time period 9 years, whichever ends first Mega Scale Industry developing backward 40% of the fixed capital investment, Maximum limit is Rs. 350 Lakh 50% of the fixed capital investment, Maximum limit is Rs. 500 Lakh Electricity Duty exemption Medium and Large Scale Industry developing backward Full exemption up to 7 years from the date of commencement of commercial production Full exemption up to 10 years from the date of commencement of commercial production Mega Scale Industry developing backward Full exemption up to 8 years from the date of commencement of commercial production Full exemption up to 10 years from the date of commencement of commercial production 100% Exemption on Stamp Duty o On Purchase / lease deeds executed for purchase/lease of land, shade and buildings and deeds of transfer of land on lease (excluding mining lease, land) o Up to 3 years on the execution of deeds related with loan & advances from the date of sanction of loan by bank/financial institutions. o On purchase/lease of land in Industrial / park established in private sector sanctioned/approved by the Govt. of India/State Government. o On the land purchased by the Chhattisgarh State Industrial Development Corporation limited for industrial area/industrial plot/industrial purposes, land bank and infrastructure creation. Exemption/ concession in land premium on land allotment in industrial / industrial parks Medium Scale Projects developing backward 50 % exemption in land premium 60 % exemption in land premium

10 Large & Mega projects developing backward 20 % exemption in land premium 25 % exemption in land premium 100% Entry Tax exemption Medium/Large/Mega projects developing backward exemption up to 6 years exemption up to 7 years Way ahead CSIDC has issued EOI on March 3, 2015 for selection of partners for SPV that will undertake development, operation and management of Integrated Textile Park. Interested entities/joint ventures/consortiums are requested to submit EOI providing following details to CSIDC office on or before April 30, 2015: Details of the company / each member of the consortium. Audited annual accounts of the company /all the consortium members for the 3 years. Details of the technical expertise and operational experience in Textile Manufacturing sector giving details for each project - the year of establishment, cost of the project etc.