Last Updated: 05 Sept 2023
The Government of Maharashtra has unveiled a groundbreaking initiative to support the state’s textile sector in its transition towards sustainability. As part of the state government’s Integrated and Sustainable Textile Policy, approved in June of this year and effective through 2023-2028, textile units can now benefit from capital subsidies for the installation of solar projects.
The textile industry is a vital contributor to India’s economy, accounting for 2.3% of the country’s GDP, 13% of industrial production, and 12% of exports. Maharashtra, in particular, plays a significant role, representing 10.4% of the nation’s total textile and apparel production and producing a staggering 272 million kgs of yarn, which constitutes 12% of India’s gross production.
The new policy seeks to bolster the textile supply chain while prioritizing long-term sustainability in its processes.
Under the new initiative, the government will provide electricity subsidies at a specified rate to existing textile units for a two-year period. The monthly electricity subsidy per textile unit will be capped at ₹4 million (~$48,163).
Sector-specific electricity subsidies are as follows:
Solar Power Subsidy:
Source: MERCOM India
One of the key highlights of the initiative is the capital subsidy offered for the installation of solar power projects. This subsidy will be calculated as either 12/24 months of electricity subsidy, the cost of the solar project installation (with a maximum capacity of 4 MW), or sector-wise capped amounts, whichever is lower.
Different capping limits have been set for various sectors within the textile industry:
- Ginning and Processing; Private Spinning Mills; Private Power Looms; Knitting, Hosiery, Garmenting sector; Textile Parks; Sericulture; and Processing sector – ₹48 million (~$577,964).
- Co-operative Spinning Mills and Co-operative Powerlooms – ₹96 million (~$1.16 million).
The subsidies for solar projects will be disbursed in two equal installments with a six-month gap between them, but only after the project has become operational. New textile units or those undergoing expansion must include the installation cost of the solar project in their detailed project reports, with the capital subsidy calculated based on the fixed capital investment, including eligible machinery and solar projects (up to 4 MW). The Maharashtra Energy Development Agency will review and approve the project reports.
Notably, textile units installing solar projects exceeding 4 MW capacity will need to cover the additional installation costs themselves. The total capacity of the solar project cannot exceed the approved load/contract demand of conventional energy by the unit.
Crucially, there is no 1 MW cap for net metering for solar projects installed by textile units. However, these units are responsible for the operation and maintenance of the projects post-installation. If these projects become unserviceable, the Maharashtra State Electricity Distribution (MSEDCL) tariff would apply without any subsidies.
The state government’s energy department will not impose any charges other than transmission charges on projects utilizing non-conventional energy sources. If a textile unit simultaneously uses conventional and non-conventional power, both sources will be considered to determine the load factor.
It’s important to note that the Handloom sector is not included in the subsidy program, but it will receive free electricity for up to 200 units per month under the Supply of Free Electricity to Handloom Weavers Households program.
Other Sustainable Measures:
For the Processing Sector, the government is promoting the use of green technologies, including Effluent Treatment Plants (ETP), Common Effluent Treatment Plants (CETP), and Zero Liquid Discharge (ZLD) systems. To encourage the establishment of ETPs and CETPs, the government will provide a 50% capital subsidy or ₹50 million (~$602,046), whichever is lower, across all zones in the state. Additionally, for ZLD technology deployment, the government will offer a 50% subsidy on eligible civil infrastructure, project, and machinery costs, up to ₹100 million (~$1.20 million). Importantly, the cost of land will not be factored into the total project cost when calculating these subsidies. The government also plans to initiate 12 recycling projects, providing a 50% subsidy or ₹20 million (~$240,829), whichever is less, for these projects focused on recycling old textile products.