The textile industry is a significant contributor to India's economy. It accounts for approximately 2% of India's GDP and 13% of its exports. To promote the growth of this industry, the Indian government launched the Integrated Processing Development Scheme (IPDS). It is a centrally sponsored scheme aimed at addressing the challenges faced by the textile sector.

The IPDS is designed to enhance the competitiveness of textile processing units. It provides financial assistance for modernization and upgradation of the infrastructure. IPDS will benefit largely in creating greenfield and brownfield projects and new processing parks. The Ministry of Textiles is the nodal ministry for this scheme.

The topics related to the Integrated Processing Development Scheme(IPDS) are very important for the UPSC Civil services exam under the syllabus of General Studies (GS- 2 and 3) paper. This article will help you to prepare for the Prelims and the Mains stage of the UPSC IAS/IPS exam.

This article discusses in detail about the objective, and significance of the scheme. We will also learn about the Funding Mechanism, Special Purpose Vehicle and important facts related to the scheme. 

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Latest News related to Integrated Processing Development Scheme

Production Linked Incentive (PLI) Scheme for the textile sector – In March 2020, the central government has announced the PLI scheme for Textiles products which includes Man Made Fibre(MMF) Apparel, Fabrics, and products of Technical Textiles, to boost the manufacturing capabilities of India and enhance export. In September 2021, the union cabinet approved a budget of Rs 10,683 crore for a five-year period and removed the import duty on cotton.

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About Integrated Processing Development Scheme

• The Integrated Processing Development Scheme (IPDS) was introduced by the central government to solve challenges in the textile processing sector.
• It was launched based on the experience and success of Integrated Textile Parks (ITP).
• IPDS was launched during the 12th Five Year Plan after the approval of the Cabinet Committee on Economic Affairs(CCEA) on 31st October 2013.
• This scheme is under the control of the Ministry of Textiles, Government of India.
• It is a centrally sponsored scheme with a financial outlay of Rs. 500 crore.
• Under this scheme, brownfield projects(four to six) and greenfield projects (three to five) will be developed.
• These projects will have common facilities such as wastewater management plants, testing laboratories, and water supply systems for the use of clusters of processing units.

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Objectives of Integrated processing development scheme

The domain of textile processing in India is a critical component of the value chain of the textile sector. The objectives behind launching the Integrated Processing Development Scheme – IPDS are given below:

• To strengthen the textile industry of India by setting up new processing parks so that it can compete in the international market.
• To adopt eco-friendly technology in textile processing.
• To assist textile processing units in meeting environmental standards fixed by government authorities.
• To promote an ecosystem of research and development (R&D) initiatives in the textile processing sector.
• To build new processing parks and upgrade existing ones for better productivity.

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Focus Areas of IPDS 

The textile processing industry of India has been facing a number of problems in the recent past. To solve these challenges and problems, Integrated Processing Development Scheme will focus on the following areas –

• Adequate and continuous supply of water
• Proper Wastewater management
• Safe treatment of industrial effluents before disposal.

Targets of IPDS

IPDS was implemented with the main target of solving various challenges faced by textile processing units across the country. Some of the major targets of the scheme are given below:

• Establishing 4-6 Brownfield and 3-5 Greenfield projects to address the needs of the existing Textile Clusters.
• These projects will cover the following type of facilities given in the below table –

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Funding Mechanism of IPDS

The IPDS will be funded through a combination of equity, grant support, and loans. 

• The GoI's grant support will be limited to 50% of the project cost with the below-mentioned maximum ceiling: 
  • Rs.75 crores for projects with Zero Liquid Discharge Systems.
  • Rs.10 crores for projects with Conventional Treatment Systems.
  • Rs.75 crores for Marine Discharge Projects.
• The project cost will be shared by the Center, State, Beneficiary, and Bank loan in the ratio of 50:25:15:10 respectively. 
  • The beneficiary contribution through equity of 15% of the project cost shall be brought upfront.
  • 10% of funding will be arranged through bank loans. 
  • The state government will contribute 25% of the project cost at the time of the release of the second installment of the GOI Grant. 
• GOI grant to be released in 3 installments:
  • 50% initially after beneficiary contribution, 
  • 30% when the plant is operational, and 
  • 20% after 3 years.
• The central assistance is subject to the following conditions:
  • Assistance will be provided only to meet capital costs. 
  • Funds shall not be used to procure land for the project. 
  • No assistance will be provided for meeting recurring or operation and maintenance costs. 
  • The central government shall not have any liability for time and cost overruns.
  • There is no provision for retrospective funding. 
  • The land will not be part of the total project cost.

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Agencies Involved Under Integrated Processing Development Scheme

The following agencies are involved in the administration, operation and implementation of the Integrated Processing Development Scheme(IPDS) –

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Benefits of IPDS

The benefits of the Integrated Processing Development Scheme are given below:

• Boost the productivity of the textile sector – The textile sector of India is still following outdated technology in the processing domain which in turn results in poor productivity. By developing new processing parks, productivity at the processing level will increase.
• Adopting clean and environment-friendly technology – The projects will adopt environmentally friendly processing standards and technology which will help in mitigating climate change.
• Increased Global competitiveness – By setting up new processing parks with upgraded technology, the textile industry of India will become globally competitive.
• Increase private sector investment – Along with government support, private sector investment will also be there for the development of major processing parks. Hence, it will increase private sector investment in the country.

Integrated Processing Development Scheme: Special Purpose Vehicle

A Special Purpose Vehicle (SPV) is a legal entity founded for a single, well-defined specific purpose. To implement the IPD Scheme, SPVs will serve as the main points, with the following responsibilities:

• Conceptualizing, formulating, achieving financial closure, implementing, and managing the infrastructure.
• Procuring land, which will not be included in the project cost.
• Facilitating the securing of bank finance for setting up units in the ITP.
• Maintaining utilities and infrastructure of the processing park and collecting service and user charges.
• Structuring the SPV so as to be self-sustaining with a positive revenue stream.
• Appointing contractors/PMA/O&M Agency in a fair and transparent manner. Obtaining appropriate performance guarantees from them to ensure timely completion of the project.
• Obtaining and maintaining statutory licenses and permits required for various facilities.

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Implementation Structure of IPDS

The IPDS in the textile sector is implemented through a well-defined structure. 

• A separate Special Purpose Vehicle (SPV) was created as a corporate body registered under the Companies Act. 
  • The Industrial Units of the processing park, Financial Institutions, and State and Central Government will have its ownership. 
• This SPV will have the operational autonomy to implement the scheme as per the guidelines stipulated by the Government of India. 
• A panel of Project Management Consultants (PMC) will be appointed for the following purpose:
  • To assist the government in evaluating the proposals for viability, and 
  • To monitor the project implementation. 
  • To provide other advisory services for effective implementation of the scheme. 
• The Government of India will also constitute a Project Scrutiny Committee (PSC) and a Project Approval Committee (PAC). 
  • These committees will provide administrative support to the scheme. 
• The SPV will appoint the Project Management Agency (PMA). The appointment will be subject to the approval of the PAC. Both entities will enter into an agreement for the same. 

This structured approach aims to ensure the effective implementation of the IPDS and the optimal utilization of resources. 

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Integrated Processing Development Scheme: Facts and Figures for UPSC

Facts and figures related to Government schemes are very important for the UPSC and other exams. So, some of the noteworthy facts related to the Integrated Processing Development Scheme are given below in the following table:

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Way Forward

• The textile sector of India has enormous potential, which should be realized through the use of innovations, cutting-edge technology, and improved infrastructure at various levels.
• India can boost the growth of the textile industry by establishing processing parks and common textile infrastructure. The emphasis should be on modernizing outmoded machines and technologies.
• The country requires a comprehensive textile strategy. Once it is established, the country must shift into mission mode in order to achieve it.

We hope all your doubts related to the topic of the Integrated Processing Development Scheme are addressed after going through this article. Testbook provides comprehensive notes for Civil services and various other competitive examinations. It has always assured the quality of its product like content pages, live tests, Gk and current affairs, mocks and so on.Ace your UPSC preparation with Testbook. Download the Testbook App now!