Jharkhand: for Garment Manufacturing Sep2019

Jharkhand: The Budding State Offering Unmatched Incentives

Overview of Jharkhand
Jharkhand, located in the eastern part of India, shares borders with West Bengal in the east, Uttar Pradesh & Chhattisgarh in the west, Bihar in the north and Odisha in the south. It is the 28th state of India celebrating almost 20 years of independence from its parent state Bihar. Jharkhand has come a long way from breaking the chains of its tribal culture to blend with the modern world and the double digit growth in its GSDP substantiates this fact. Jharkhand has one of the largest mineral base in the world accounting for ~40% and 30% of India’s overall minerals and coal, respectively. Due to its large mineral reserves, mining and mineral extraction are the major industries in the state.

The state has a land area of over ~80,000 km and is home to ~33 million people, majority of whom live in the rural areas of the state. There are 15 national highways running through Jharkhand, measuring ~2,400 km and has ~6,880 km of state highways. In terms of seaports, West Bengal’s Haldia and Orissa’s Paradip are the nearest sea ports for both inter and Intra country trade. Besides developed infrastructure, Jharkhand also enjoys cost-effective and abundant availability of labor.

In the textile value chain, Jharkhand is the largest producer of Tassar silk in the country. The state produced 2,630 MT of silk in 2016-17. Jharkhand is also the sole supplier of certified organic Tassar silk in the world. However, despite the availability of required infrastructure, there is very limited presence of textile industry in the state. The state has only ~30,000 spindles for yarn production with negligible presence of downstream industry.

State Government’s Efforts to Build the Textile & Apparel Industry of State
Jharkhand is progressing fast on adopting best practices for making an investor friendly environment in the state to facilitate investments and generate employment. Measures such as single window clearance, online payments, time bound approvals, availability of online information, standard operating procedures for approvals, etc. are being adopted by various departments and government agencies.

In order to boost the development of textile value chain in the state, Jharkhand government launched Jharkhand Textile, Apparel and Footwear Policy-2016 with a vision to cater to increasing domestic and international market and contribute to sustainable employment and economic growth of the state.

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Among the various incentives provided under the scheme, wage subsidy and training subsidy provided for workers stand out as the most attractive incentives under this scheme. In addition to that, the capital subsidy being offered.

Policy Benefits for the Apparel Industry Investors
As per the incentives under Jharkhand Textile, Apparel, Footwear Policy-2016, the below figures illustrate the incentives an investor can gain by establishing a garment unit with 500 sewing machines:

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As per the above mentioned incentives, a 500 sewing machine garment factory may avail incentives of up to 300% of the total project cost over a course of 7 years.

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Note: The above subsidy calculation for garment factory has been done considering a standard garment business plan with industrial sewing machines such as Juki sewing machine, Brother sewing machine, etc.

Though Jharkhand currently does not have a developed textile value chain, the government is making tremendous efforts to gear the state as an export-oriented garment state of India. The present textile & apparel policy is one of the most lucrative apparel policies in the country offering nearly 300% return on the total investment. Given the government’s proactive efforts to build garment manufacturing industry and abundant availability of required resources, we at Wastra believe that Jharkhand is one of the most attractive states for textile and garment investments.

This blog has been authored by Ayushi Puri, Consultant and Vijay Gupta, Associate Consultant.