India Needs ‘One Nation, One Textile Policy’ and ‘One Product, One Slab’ GST System

Richa Bansal: Has Gujarat’s latest textile policy helped?
Gaurang Bhagat: It’s acceptable—not perfect, but workable. The main hurdle now isn’t policy—it’s operational cost, particularly power. Electricity here costs about ₹8.5 per unit, whereas in Maharashtra it’s around ₹4. That difference alone makes a huge impact on competitiveness. When your production cost is higher by several rupees per metre, you can’t match the price of someone in another state. Power tariffs need rationalisation if Gujarat wants to stay ahead.

So apart from uniform policies, we need uniform infrastructure costs—especially for power.

Richa Bansal: You spoke about policy gaps and differences across states. Could you elaborate on what exactly needs to change in India’s textile framework?
Gaurang Bhagat: The biggest issue is inconsistency—too many different slabs, too many different rules. GST, for instance, should have been simple. There should be a uniform 5% rate across the entire value chain. Right now, cotton yarn attracts one rate, polyester another, and the raw materials used for synthetics—PTA and MEG—have an even higher rate of 18%. That’s completely unbalanced.

If one stage of the value chain is taxed higher than another, that burden passes down the line. Manufacturers can’t claim full input credits, so they either lose margins or look for shortcuts. That’s how evasion starts. If everything were taxed evenly—cotton, synthetic, blends—there’d be no incentive to cheat.

Richa Bansal: You’ve studied many state policies. Which state, in your view, has done the best overall for textiles with progressive policies?
Gaurang Bhagat: Maharashtra’s policy stands out. It’s truly pro-industry, straightforward, and offers better support for expansion. They’ve offered higher subsidies, easier clearances, and better incentives for new investments.

Richa Bansal: What about environmental concerns, especially with polyester? Gujarat is a hub for both cotton and polyester, but polyester comes from petroleum and is non-biodegradable. Doesn’t that worry you?
Gaurang Bhagat: It’s true that polyester is petroleum-based and man-made, but globally it dominates. Whether it’s China, Japan, the US, or Europe, polyester and blends rule the market. There are practical reasons: women’s fashion changes rapidly, and polyester fabrics are cheaper, more colourfast, and easier to produce. Manufacturers know consumers’ purchasing power; they need to offer fashionable, affordable clothing. Polyester, especially in printed T-shirts or blended garments, gives brighter colour and longer life. That’s why it sells more. Cotton fades faster and costs more to maintain.

Richa Bansal: But it’s polluting the planet. Shouldn’t the government or industry address this?
Gaurang Bhagat: Eventually, countries like the US and those in Europe will take the lead. They already have stricter recycling norms. India is moving in that direction too. Recycling of PET bottles into fibres has started. Using discarded fabric for recycling is still limited but growing. A few companies are experimenting with it.

Richa Bansal: Do you know anyone working specifically on recycling discarded fabrics?
Gaurang Bhagat: Only a few names come to mind. Some companies are using plastic bottles to make polyester fibre. As for fabric-to-fabric recycling, it’s still at an early stage, though some small units have begun pilot projects.

Richa Bansal: What solutions to these problems—credit, policy issues, dumping? 
Gaurang Bhagat: We’ve been repeatedly submitting memoranda to the government and also speaking publicly about these issues. The first and biggest step must be to stop Chinese dumping. We talk about being swadeshi, yet we allow cheap Chinese fabric to flood our market. That’s a contradiction. Self-reliance is impossible while we keep importing.

Richa Bansal: Some traders argue that imports are cheaper and help them sell at better margins. Doesn’t that make economic sense?
Gaurang Bhagat: Only in the short term. If we truly want to be self-reliant, imports must stop. Only then will we be forced to create quality products and machinery within the country. We are capable of it—there’s no reason we can’t—but as long as we depend on cheap imports, we won’t develop our own strengths.

Richa Bansal: Is the dumping mostly from China, or are other countries like Vietnam also involved?
Gaurang Bhagat: Mostly from China. Some material comes from Vietnam or other Asian countries, but China dominates.

Richa Bansal: And the government knows all this?
Gaurang Bhagat: Of course it knows, but enforcement is the issue. There are pressures—trade, political, maybe diplomatic—but I can’t say exactly from where.

Now, the trade has become more complicated. Many importers bill the goods in Dubai but ship them to Chennai or Mumbai. So on paper it’s a Middle East import, but the goods are Chinese. Even home delivery consignments are arriving—fabric worth crores sent to individual addresses through these routes.

Richa Bansal: Incredible yes, but well known. Can this be stopped?
Gaurang Bhagat: It can be, easily—if there’s a will to do it. But traders are self-interested. When they get cheap goods and quick profits, they forget everything else.

Richa Bansal: That’s very true. But now, about the US tariffs. Can such tariffs indirectly help us become self-reliant by pushing production locally?
Gaurang Bhagat: Possibly, but you must remember—India was self-reliant once. Before 1994, Ahmedabad alone had more than 125 composite mills. Each mill employed between 800 and 1,500 workers. They handled everything—spinning, weaving, processing—all under one roof, except garmenting.

During the Quit India movement, people burned foreign clothes. After that, Indian mills thrived. We even exported to Russia and Germany. Our bedsheets were well known. Many processors still export directly to Germany or the US.

The real decline began when cheap imports started about 30-35 years ago—first from Korea, then from China. Consumers got used to cheaper synthetic goods. Synthetic bedsheets killed the cotton sheet industry in Panipat. When a cotton sheet costs ₹150 and a synthetic one ₹125, consumers naturally shift. That hurts the farmer too, because cotton demand falls.

Gujarat produces around 35% of India’s cotton. We export that cotton and yarn to China, but no finished products. That must change. If dumping stops, we’ll regain self-reliance and generate large-scale employment again—I can guarantee it.

Richa Bansal: Earlier there were about 150 cotton mills in Ahmedabad. But they closed too.
Gaurang Bhagat: Mainly because they failed to modernise with time. One generation worked hard to build them, the next maintained them, and the third squandered everything. Government policy changes also hurt. During Indira Gandhi’s time, the composite structure was broken. Mills were given permission to run separate spinning, weaving, and processing units. That destroyed integration.

Earlier, a composite mill had to follow strict labour and excise rules—pay provident fund, gratuity, and other compliances. But the smaller dyeing and processing units didn’t. They operated informally, with low costs and no regulations. A mill had to pay excise as soon as fabric left its gate, but small units evaded it. Some under-reported production—showed one lot on paper but produced ten. Nobody checked.

Naturally, the composite mills’ costs rose while smaller unorganised units thrived. Slowly, the large mills became unviable and shut down.

Now, people are realising again that integration is essential. The composite model is making a comeback.

Richa Bansal: Surat became the synthetic capital of India and Ahmedabad was the Manchester of India. Why couldn’t we scale globally—make Surat the synthetic capital of the world and Ahmedabad the Manchester of the world?
Gaurang Bhagat: The government has done its part. It provides capital subsidies, GST benefits, and various policy supports—2012, 2019, and now the 2024 textile policy. Development is happening. But the local business model has changed. Many traders have become agents instead of manufacturers. Automation has grown, and advanced machinery is being imported.

Look at Arvind Limited—still more than 70% of its output is exported. To compete globally, you must have both quality fabric and competitive prices. In garmenting, labour cost decides everything. Bangladesh, Sri Lanka, Indonesia, Cambodia—all have cheaper labour. There, two lakh workers in a cluster are common; here even five thousand is hard to manage because our wage rates are higher.

Richa Bansal: What about training and upskilling? Earlier, labour for textile mills in Gujarat used to come largely from Bihar and Uttar Pradesh. Now those states are trying to retain their own workforce by promoting local employment. Does that create a shortage for Gujarat?
Gaurang Bhagat: Yes, and that’s why Gujarat is focusing on developing its local workforce. The state has started several training programmes to build skills within Gujarat itself. The government provides financial assistance for these centres, and industries are encouraged to open in-house training units.

In my own unit we have set up a training centre. Existing workers get skill upgrades, and new recruits—whether local or from outside—are trained before joining production lines. The idea is to make training a continuous process. Going forward, I believe the government should link these skill programmes with vocational colleges, so students get direct industrial exposure and job placements right after completion.

The government gives funds for training, but proper auditing of how this money is used is essential. The utilisation must be monitored closely so that funds actually reach trainees and aren’t lost in bureaucracy.

Richa Bansal: A trend seen is of textile entrepreneurs diverting their money into real estate. How widespread is that?
Gaurang Bhagat: Honestly, only about 5% of people did that. But they won’t talk about it. The fact is, when traders saw higher returns in property or the stock market, they moved their capital out of textiles. Everyone knows it happens, but it’s not something people openly discuss. It’s one of those open secrets of Indian business.

Richa Bansal: What’s your overall outlook for the Indian textile sector?
Gaurang Bhagat: India’s textile industry has enormous potential, but it’s weighed down by systemic inefficiencies—credit delays, uneven taxes, and dumping. The day imports are truly controlled and we rely on our own manufacturing strength, we’ll see a turnaround.

Self-reliance isn’t a slogan—it’s a chain reaction. Stop imports → local production increases → employment rises → domestic demand strengthens. That’s the path forward.

But right now, the market is filled with self-interest. Everyone thinks short-term—how to make quick money. Few spare a thought on how to strengthen the ecosystem. That attitude needs to change.

Richa Bansal: Is there anything else you’d like to add?
Gaurang Bhagat: I would only like to reiterate that today people hardly think beyond their own interests. Everyone is focused on self-benefit. There’s a lot of selfishness in the world now—very few think about the larger good. That’s the reality of business today.