Gujarat, which has traditionally been at the forefront of the history of the textile industry, hasn't had a textile policy since 2022 when the 2017 plan ended. Ahead of the policy lapsing, major textile players had pleaded with the state government to unveil a new policy well before the 2024 Lok Sabha polls and the model code came into effect. 

The government assured the captains of the textile industry that a new five-year policy would be out in time, but no such announcement came then. 

The most recent update, however, is that the industry department has prepared a new policy after consulting the Chief Minister and the Industry Minister. The final contours of the policy are now with the finance department for its approval, which is expected soon, said sources. 

Leaders in Surat's textile sector fondly recall Modi's 2012 textile policy and its game-changing nature, offering benefits like tax refunds, 100 per cent power benefits on machinery, and interest subsidies. 

They have been asking for a reinstatement of the 2012 policy. 

In the 2017 policy, most of these benefits were removed, leaving several gaps and a reduced power benefit. Analysts claim that this "lukewarm attitude towards industry policy" has led not only to a decline in investment in Gujarat's textile sector but also to projects moving out of the state to locations outside the state and the country. For instance, Arvind Mills came up with plans for a plant in Jharkhand, favouring the eastern state over Gujarat where much of its investment is located. 

This has also resulted in the unintended effect of forcing caution and restraint on industrialists from other states planning to invest in Gujarat.

Industrialists said that in the 2017 policy, small and medium businessmen in the state didn't get substantial benefits. Rajasthan, Madhya Pradesh, and Maharashtra had better policies, with lower power tariffs and subsidies. Even Uttar Pradesh, Bihar, and Odisha offered more attractive terms, they said. 

At Rs 10.50 per unit, Gujarat perhaps has one of the highest power tariffs in the country, analysts said. Higher power tariffs with fewer subsidies mean higher costs, which in turn means industries from the state face tougher competition, according to them.

Industrialists said even for a small textile project, an investment of Rs 100 crore is required in Gujarat. Without any benefits in the state's textile policy, businessmen have turned to China and Vietnam, where many have invested crores. 

A draft textile policy promising a number of sops was in circulation and The Secretariat earlier reported its possible benefits. We reproduce a chart below which summarises the promised policy:

However, it is to be seen what the final shape the policy, emerging from the corridors of power in the state, takes.

Industry leaders are of course still hoping the much-sought-after new policy will at least bring back power benefits, GST refund advantages, and subsidies for buying machinery.