Indian Government Energizes the Cotton Spinning Industry

While the state government in Gujarat is prohibited from providing direct electricity subsidies to industries, there are steps it can take to nudge development in the right direction. In its efforts to draw more spinning business into the state, for example, Gujarat officials are making plans to develop industrial parks specifically for cotton yarn spinners. The parks will not only have captive power plants, but also agreements in place to provide a large supply of inexpensive fuel to keep them running.

Although Gujarat is the largest cotton-producing state in India (150,000 tonnes annually), it is at a serious disadvantage when competing for spinning businesses. With many other states offering significant subsidies to provide power to spinners, the cost of energy is Gujarat’s biggest competitive disadvantage.

To make the deal even sweeter, Gujarat’s government plans to build the industrial parks as close as possible to the cotton fields, thus reducing the time and cost of transportation.