The MITRA Scheme: Mega Investment Textiles Parks

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  The MITRA Scheme: Mega Investment Textiles Parks

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1. A new fabric: The Finance minister in Budget 2021-22 proposed the MITRA Scheme - Mega Investment Textiles Parks (MITRA) for Textile sector. This gave hope to the aspirations of quick job creation in India. Over the years, India has lagged behind in textiles and apparels manufacturing and exports, and others like Bangladesh have raced ahead.
2. Key details: The scheme will enable the textile industry to become globally competitive, and may also attract large investments, boost employment generation and exports. It aims to create world class infrastructure with plug and play facilities to enable create global champions in exports. MITRA will be launched in addition to the Production Linked Incentive Scheme (PLI). Government also announced uniform deduction of the BCD rates on caprolactam, nylon chips and nylon fiber and yarn to 5 per cent.
3. Bangladesh versus India: How did Bangladesh become competitive? A key reason for it was cheaper production of goods in Bangladesh, than in India. The unit labour cost of producing a cotton shirt in the United States is around $7, in India around 50 cents, and in Bangladesh only 22 cents. This gives Bangladesh a competitive advantage over the rest of the nations, including India. Bangladesh has more than 80% of market value of exports by large enterprises, while India has 80% by small enterprises. Readymade garment exporters in Bangladesh, therefore, have economies of scale. Also, Bangladesh’s exports to the European Union and Canada are largely duty-free. In order to increase exports of readymade garments, Indian firms will have to grow bigger. And if there are more jobs in the garments sector, women will benefit. Bangladesh also has an FTA with EU, thereby attracting low or nil import duties. India has no such FTA.
4. About PLIS: In order to boost domestic manufacturing and cut down on import bills, the central government in March this year introduced a scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units. Apart from inviting foreign companies to set shop in India, the scheme also aims to encourage local companies to set up or expand existing manufacturing units. By Feb 2021, the scheme had been rolled out for mobile and allied equipment as well as pharmaceutical ingredients and medical devices manufacturing. These sectors are labour intensive and are likely, and the hope is that they would create new jobs for the ballooning employable workforce of India. 
5. Ten sectors: The government aims to expand the ambit of the production-linked incentive (PLI) scheme to include as many as ten more sectors such as food processing and textiles other than the already included mobile phones, allied equipment, pharmaceutical ingredients and medical devices.
6. Why needed: The idea of PLI is important as the government cannot continue making investments in these capital intensive sectors as they need longer times for start giving the returns. Electronics and pharmaceuticals themselves are large sectors, so, at this point, if the government can focus on labour intensive sectors like garments and leather, it would be really helpful.
7. Sectors currently with PLI: As a part of the PLI scheme for mobile and electronic equipment manufacturing, an incentive of 4-6 per cent is planned for electronics companies which manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electromechanical systems.

Read more on - Polity | Economy | Schemes | S&T | Environment

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