Gujarat offers major incentives to industry,Punjab hits panic button

State sets up panel to offer perks and retain textile spinning units.

Written by Chitleen K Sethi | Chandigarh | Published: September 11, 2012 12:51 am

State sets up panel to offer perks and retain textile spinning units

Less than a week after Gujarat government announced its new textile industry promotion policy offering a slew of incentives,Punjab government has hit the panic button fearing the flight of its textile spinning units to Gujarat.

The state government has already formed a high powered committee to offer its own set of incentives to either match or outdo the freebies offered by Narendra Modi-led government in Gujarat. The committee includes representatives of the Punjab textile spinners.

There are 38 spinning mills — including JCT Phagwara,Jindal Cotex,Nahar Industries,Oswal Spinning,Rana Polycot,Trident India Ltd,Vardhman Textiles,Winsome Yarns Ltd and SeL India — in Punjab and majority are functioning with some form of assistance from the state government.

The incentives at present given by the Punjab government,however,in no manner compare to the ones on offer from Gujarat and Maharashtra and the fear of losing the industry giants to these state is real. “We have asked the committee to compare the incentives offered by Maharashtra and Gujarat and come up with a set of fiscal exemptions that we can give to the textile industries here. Its important that we hold back the textile spinning industry as it is one of the major sources of employment,” a senior officer said.

Gujarat is one of the largest producers of raw cotton in the country – contributing up to 40 per cent of the total cotton pool – but is short on cotton-based industries. With its cotton growers focussing on exports,Gujarat’s cotton mills account for only 7 per cent of the total number of spinning mills in the country.

In order to attract spinning and weaving industries to be set up near cotton growing belts,Gujarat had on September 5,offered an interest subsidy of 5 per cent for a period of five years for new plants and machinery for ginning and processing,interest subsidy of 7 per cent on new plant and machinery for cotton and 150 acres of land and assistance up to Rs 30 crore for cotton spinning industries.

Other than this,the new policy also offers VAT exemption ranging from 80 to 100 per cent for a period of 10 years and exemptions in power tariff and stamp duty on purchase of land and machinery. For apparel parks,Gujarat will offer Rs 10 crore as assistance or 50 per cent of the cost of infrastructure,whichever is lower.

Gujarat has set aside Rs 70 crore for direct assistance to the textile industry. Gujarat intends to attract an investment of Rs 20,000 crore and generate employment for 25 lakh people.

In April this year,Maharashtra,which accounts for 15 per cent of the country’s spinning mills,also announced its textile policy aimed at attracting investment of Rs 40,000 crore and give jobs to 11 lakh people. It offered 10 per cent capital subsidy for new textile projects and 12.5 per cent interest subsidy on long term loans linked to centrally-sponsored Technology Upgradation Fund Scheme for new projects.

The Punjab committee’s focus is to first suggest means by which the already existing units in the stated can be retained here. The government,add sources is getting in touch with each spinning mill owner of the state for a joint meeting.

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