Incubation Centers for Apparel Manufacturing

The textile industry plays a major role as one of the largest contributors to Indian GDP, foreign exchange earnings and employment generation. The size of the Indian apparel market is estimated to be USD45 billion and is expected to grow to USD200 billion by 2025. Further, the textile industry in India currently employs about 35 million workers and it is said that for every 1 lakh invested in the apparel industry, 7 additional jobs are created. Therefore, to strengthen the Indian Textile and Apparel Industry, the Government of India has introduced the concept of Incubation Centers for Apparel Manufacturing in the 12th plan period. In this article, we look at the scheme for Incubation Centers in Apparel Manufacturing in detail.

Objective of the Scheme

First-generation entrepreneurs and startups in the apparel industry face a number of challenges such as lack of capital for investment in land, buildings and machinery, limited access to funding, competition from established players and operational inefficiencies due to lack of experience and expertise. Therefore, there must be a mechanism for the creation of a holistic ecosystem for promoting entrepreneurship in apparel manufacturing that would address the above constraints and help Entrepreneurs setup successful apparel manufacturing businesses.

The scheme for incubation centres in apparel manufacturing addresses these difficulties by creating an integrated workspace and entrepreneurial ecosystem for startups in the apparel industry. This eco-system would increase the chance of success of startups and decrease the time and costs required to start a business. Successful apparel businesses incubated in these incubation centres would thus:

Promote entrepreneurship in apparel manufacturing
Create additional manufacturing capacity
Generate additional employment opportunities

Setting Up Incubation Centers for Apparel Manufacturing

The scheme aims to establish these incubation centres in textile parks, with each incubation centre having a maximum of three incubatees. The incubation centres for apparel manufacturing can be set up by the following entities or institutions (Implementing Agency):

Groups of Entrepreneurs;
Industry Associations;
Developers of SEZs;
Textile Parks promoted by State Governments
State Industrial Development Corporations
SPVs promoted by the Ministry of Textiles

The incubation period for every incubatee is 3 years and during the incubation period, the entrepreneur should be able to acquire knowledge, adapting methodologies to run the venture on their own. There are two components to the Incubation centres namely, Component-I and Component-II. The first component will deal with the infrastructure program and the 2nd component will be helping in Capacity Building.

Component-I - Infrastructure

Factory Building: Ready to use plug & play factory building with a total built-up area not exceeding 45000 square feet @ 15,000 square feet per incubatee. The factory building must contain the operations area, packing, office, store, workers amenities, display, etc.
Plant & Machinery: 100 stitching machines with ancillary machinery per incubatee.

Grant: The scheme provides a 100% grant in aid for the implementing agency providing infrastructure support. The amount of assistance must not exceed Rs.4 crores per incubatee and Rs.12 crores per Incubation Center.

Component-II - Capacity Building

The scheme envisages that the Incubatees will be individuals of the following categories:

Degree or Diploma holders of any disciple related to textile, apparel, fashion design, etc.,
First-generation entrepreneurs

The scheme provides the following financial assistance to each of the incubatee towards capacity building.

Skill Development for Workers: The scheme provides Rs.20 lakhs per incubatee towards the training of 200 workers. The training should be carried out for 3 months in accordance with the norms prescribed by the Integrated Skills Development Scheme of the Ministry of Textiles.

Domestic & International Fair Participation: The scheme provides Rs.5 lakh per incubatee for a visit to 3 domestic exhibitions in the textile industry and 1 international fair participation.

Product Design & Development: The scheme provides Rs.5 lakh per incubatee towards training on product design and development.

Entrepreneurship Development: The scheme provides Rs.1 lakh per incubatee towards training on entrepreneurship development.

Grant: Hence, the scheme for the Incubation Center for Apparel Manufacturing provides Rs.31 lakh in financial assistance for each of the Entrepreneur in the Incubation Center.

Assistance to Implementing Agency for Setting up Incubation Centers

The land required for the Incubation Center to be provided by the Implementing Agency. The subsidy is provided under the scheme for the following infrastructure support provided by the Implementing Agency:

Role of Implementing Agency establishing the Incubation Center for Apparel Manufacturing:

Conceptualise, formulate and prepare the detailed project report;
Provide land for the incubation centre;
Identify, screen and select the incubatees through a fair and transparent selection process on the basis of their business plan;
Obtain and maintain all statutory approvals;
Create and maintain the incubation centre with financial assistance from the Ministry of Textiles;
Operate the incubation facility through the collection of rentals and other user charges to ensure sustainability;
Assist the incubatee in obtaining financial support, if required;

Grant release for Infrastructure Support

The approved grant will be released in three instalments provided the progress is measured by the implementing agency. The first & second instalments will be of 30% of approved project cost and the remaining 40% of the cost will be released on completion of the project. All the fund release will happen after PIA's approval to the ministry and the PIA will issue the completion certificate.

Grant release for Capacity Building

The grant release for capacity Building Support and Linkages will be done to the PIA after the identification of the incubatees. The grant will be released in the three instalments on approval by the implementing agency. The timeline for completing a project is a maximum of 18 months. The guidelines can be accessed below:

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