Government Incentives & Schemes for Foreign Direct Investments (FDI) in India-Clothing & Apparel Industry: Best FDI Attorney in India

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“Foreign Direct Investments in India or FDI in India has seen a steep increase across all the sectors. There are several Government Incentives and Schemes organised by the Governments at the Central as well as State level. Having said that, Special Economic Zones SEZ and Exclusive Economic Zones EEZ have been set up across India. The entire process has been overhauled and the legal advice of an FDI attorney is entirely called for. Further, a lot of tax benefits is/are also extended for foreign investors.”

Introduction
In India, the central government encouraged the textile industry in both direct and indirect ways. The textile sector in India plays an essential role in the country’s economy. It produces around 4% of the country’s GDP and employs millions people directly and indirectly. The Indian market is flourishing and thriving in the domestic and global market.

Initiatives by Government in Textile Industry: The government in the case of automatic route has approved 100% FDI in the marketing industry, with a requirement that about 30% of the merchandise be sourced locally. This has increased domestic production as well as attracting multinational companies to the domestic market. The government’s plan to implement the Goods and Service Tax (GST) as per the existing fiscal year would help to organise the unorganised sector of the business and bring it into the ambit of GST, allowing the industry to claim input tax credits. This would assist to streamline the textile value chain in India. As per the ‘Make in India’ initiative, the textile industry is the priority sector in India.

Recent Developments in the Textile Industry: On January 1, 2022, the Indian government announced an unified GST rate of 12 percent on Man-Made Fabrics (MMF), textiles which are MMF, MMF yarns, and garments. Besides that, both the national government and state governments give direct assistance. To encourage investment in this industry, a variety of programs and strategies have been implemented.

Schemes initiated by the Ministry of Textiles: With the adoption of the Production Linked Incentive Scheme, India has made a significant step toward dominating the global textile industry. The fundamental goal of this plan is to establish maximum leverage in order to obtain economies of scale. The production-linked technique will aid Indian corporate enterprises in becoming top contenders in the highly competitive worldwide textile rivalry.
• The Amended Technological Upgradation Fund Scheme (ATUFS), It is major scheme by the Central Government which is exclusively available for the textile sector, which provides capital subsidies in the range of 10-15% to the textile sector. This scheme would also help to regulate the import, employment, export, quality, supplementing investments etc.

• The Scheme for Integrated Textile Parks (SITP) offers PPP assistance to overcome the textile industry’s organization deficit by establishing textile parks along with appropriate facilities for manufacturing of textiles, including ETPs, continuous supply of power, road etc.

• The Integrated Processing Development Scheme (IPDS) seeks to help the textile industry develop as more internationally competitive by providing grants of up to 50% of the project cost, which does not include the land costs for initiatives using Zero Liquid Discharge Systems and up to Rs. 10 crores for initiatives using conventional treatment systems. A package for clothes and home textiles was recently unveiled by the Central Government. Increased capital subsidies, income tax incentives for manufacturing, and changes to labour rules are all part of the package. Apart from the aforementioned plans, most of the state government have enacted textile strategies to entice investment by giving fundings and other necessary assistance.

• Production Linked Scheme(PIL)- With the adoption of the Production Linked Incentive Scheme, India has made a significant step toward dominating the global textile industry. The fundamental goal of this plan is to establish maximum leverage in order to obtain economies of scale. The production-linked technique will aid Indian corporate enterprises in becoming top contenders in the highly competitive worldwide textile competition. The PLI plan will play a key role in generating a large number of job possibilities, giving much-needed support to deserving industrial and service businesses. There is also the possibility of investing Rs 19000 crore in different medium and small enterprises’ infrastructure development.

• Atma Nirbar Scheme- Self-reliance is a crucial milestone that the Indian government has included into its trading and operating strategies. Multiple suggestions have been presented by the Ministry of textiles to increase commerce in local marketplaces while also boosting textile exports to other countries. The basic objective is to enrich and thrive the artisan class, which existed in India before the British arrived two centuries ago.

The entire process of FDI involves several legal compliances and fulfilment of applicable laws which the foreign investor has to comply with and adhere to.

Conclusion
Over the last several years, the Ministry of Textiles has established a number of initiatives aimed at promoting India’s textile industry and improving the livelihoods of those who work in it. Schemes and initiatives by government will be encourage and motivate investors and foreigners to set up textile companies or to invest in these businesses.
Authored By: Adv. Anant Sharma & Afsana Khan