Small and medium units find it difficult to enter the textile sector in Gujarat. The main problem is: increasing cost of machinery in the textile value chain. Manufacturing of yarn, weaving, processing and garment manufacturing require sizeable investments.

In case of power looms, entrepreneurs earlier were able to start a business by spending a few lakhs on three to four traditional machines. However, today a single power loom costs up to Rs 50 lakh. Hence, it would be out of reach for micro and small businesses. Even medium size businesses are feeling the pinch. Setting up a textile unit earlier used to cost around Rs 12 crores but now with cutting edge technology, the cost would easily cross Rs 100 crores.

In Gujarat, garment manufacturing is limited to a handful of big players. But unless micro and small units become part of the textile value chain, the textile industry cannot generate adequate jobs. Unlike Tirupur, where small and medium units thrive in ready-made cloths, Gujarat lacks a proper ecosystem. Expensive textile machinery and equipment has made the entry of new entrants in the segment more difficult. A sizeable capital subsidy on machinery would be required in order to make a new unit affordable.