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Our Economic Bureau
New Delhi, Jan 20: In a major policy initiative, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved a textiles ministry proposal to set up a Rs 25,000 crore technology upgradation fund scheme for the textile as well as the jute sector.
Textiles minister Kashiram Rana, who made the announcement at a news conference here, termed the CCEA decision as `historic' as the scheme would vastly improve textile industry's competitiveness in global market after the complete phase-out of the multi-fibre arrangement by the year 2005.
Rana and textiles secretary Shyamal Ghosh explained that the scheme would be available for viable and bankable projects only. They further said that the scheme would hold for a period of five years with the textiles ministry providing an interest incentive of 5 percentage points on loans availed of by weaving, knitting and finishing units, including composite mills, garment manufacturing, cotton ginning and pressing sectors.
The interest incentive amount would bereimbursed to the concerned financing institutions by the textiles ministry on a half-yearly basis.
The scheme would, however, not be applicable to stand-alone spinning mills, most of which had taken advantage an earlier scheme operated by the Industrial Development Bank of India (IDBI) in the Sixth Plan. There was no such scheme during the Seventh and Eighth plans.
Ghosh said the interest subsidy amount would work out to nearly Rs 3,000 crore which would be available to the beneficiaries of the scheme.
After the ginning and pressing units would become eligible for concessional finance under the proposed cotton technology mission, they would no longer be eligible for the technology upgradation fund scheme.
To administer the scheme, IDBI has been named as the nodal agency for the textile industry (excluding powerloom and hosiary sector), Small Industries Development Bank of India for the powerloom sector, garment manufacturing units and for the cotton ginning and pressing sector and Industrial FinanceCorporation for the jute industry.
The interest incentive would be reimbursed to the respective nodal agency through the budget (Plan) provisions of the textiles ministry.
The total amount required by the textiles ministry for reimbursement of interest incentive is estimated at around Rs 300 crore during the Ninth Plan period. A large amount would be required during the 10th and 11th Plan periods since the interest incentive would be required to be given till the last loan instalment becomes due which could even be up to the first year of the 12th Plan in case the maximum period for repayment is stipulated to be 10 years.
An inter-ministerial steering committee chaired by the textiles secretary would be set up to lay down norms and guidelines for operationalising the scheme. The committee would also prescribe the maximum period for repayment of loans under the scheme.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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